<PAGE>
As Filed with the Securities and Exchange Commission on January 12, 1999
REGISTRATION NO. 33-41628
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 11 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
AND
AMENDMENT NO. 18 TO
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
(Exact Name of Registrant)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Name of Depositor)
ONE SUN LIFE EXECUTIVE PARK
WELLESLEY HILLS, MASSACHUSETTS 02181
(Address of Depositor's Principal Executive Offices)
DEPOSITOR'S TELEPHONE NUMBER: (781) 237-6030
EDWARD M. SHEA, ASSISTANT VICE PRESIDENT AND COUNSEL
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ONE COPLEY PLACE
BOSTON, MASSACHUSETTS 02116
(Name and Address of Agent for Service)
COPIES OF COMMUNICATIONS TO:
RUTH EPSTEIN, ESQ.
COVINGTON & BURLING
1201 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20044-7566
- --------------------------------------------------------------------------------
/X/ IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON APRIL 30, 1999
PURSUANT TO PARAGRAPH (a) OF RULE 485.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Prospectus dated May 1, 1999
for each of the following:
MFS Regatta Platinum
MFS Regatta Gold (to be provided by amendment)
Futurity II (to be provided by amendment)
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
MAY 1, 1999
PROFILE
MFS REGATTA PLATINUM
VARIABLE AND FIXED
ANNUITY
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE FULL PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE
READ THE PROSPECTUS CAREFULLY.
1. THE MFS REGATTA PLATINUM ANNUITY
The MFS Regatta Platinum Annuity is a flexible payment deferred annuity
contract ("Contract") designed for use in connection with retirement and
deferred compensation plans, some of which may qualify for favorable federal
income tax treatment. The Contract is intended to help you achieve your
retirement savings or other long-term investment goals.
The Contract has two phases: an Accumulation Phase and an Income Phase.
During the Accumulation Phase you make payments into the Contract; any
investment earnings under your Contract accumulate on a tax-deferred basis and
are taxed as income only when withdrawn. You determine the length of the
Accumulation Phase. During the Income Phase, we make annuity payments in amounts
determined in part by the amount of money you have accumulated under your
Contract during the Accumulation Phase.
You may choose among 25 variable investment options and a range of fixed
interest options. For a variable investment return you choose one or more
Sub-Accounts in our Variable Account, each of which invests in shares of a
corresponding series of the MFS/Sun Life Series Trust (collectively, the
"Series") listed in Section 4. The value of any portion of your Contract
allocated to the Sub-Accounts will fluctuate up or down depending on the
performance of the Series you select, and you may experience losses. For a fixed
interest rate, you may choose one or more Guarantee Periods offered in our Fixed
Account, each of which earns its own Guaranteed Interest Rate if you keep your
money in that Guarantee Period for the specified length of time.
The Contract is designed to meet your need for investment flexibility. At
any time you may have amounts allocated among up to 18 of the available variable
and fixed options. Until we begin making annuity payments under your Contract,
you can, subject to certain limitations, transfer money between options up to 12
times each year without a transfer charge or adverse tax consequences.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Just as you can elect to have your Contract value accumulate on either a
variable or fixed basis, or a combination of both, you can elect to receive
annuity payments on either a variable or fixed basis or both. If you choose to
have any part of your annuity payments come from the Sub-Accounts, the dollar
amount of your annuity payments may fluctuate.
The Contract offers a variety of annuity options. You can select from
among the following methods of receiving either variable or fixed annuity
payments under your Contract: (1) monthly payments continuing for your lifetime
(assuming you are the annuitant); (2) monthly payments for your lifetime, but
with payments continuing to your chosen beneficiary for 5, 10, 15 or 20 years if
you die before the end of the period you have selected; (3) monthly payments for
your lifetime and the life of another person (usually your spouse) you have
chosen; and (4) monthly payments for a specified number of years (between 5 and
30), but with payments continuing to the beneficiary for the remainder of the
period specified if you die before that period has elapsed. We may also agree to
other annuity options in our discretion.
Once the Income Phase begins, no lump sum option is available under the
Contract, and you cannot change your choice of annuity payment method.
<PAGE>
3. PURCHASING A CONTRACT
You may purchase a Contract for $10,000 or more, under most circumstances.
You may increase the value of your investment by adding $1,000 or more at any
time during the Accumulation Phase. When your Contract value reaches $1,000,000,
you need our permission to make additional payments. Your registered
representative can help you fill out the proper forms.
4. ALLOCATION OPTIONS
You can allocate your money among Sub-Accounts investing in the following
Series of the MFS/ Sun Life Series Trust:
<TABLE>
<S> <C>
Bond Series Money Market Series
Capital Appreciation Series New Discovery Series
Capital Opportunities Series Research Series
Conservative Growth Series Research Growth and Income Series
Emerging Growth Series Research International Series
Equity Income Series Strategic Income Series
Government Securities Series Total Return Series
High Yield Series Utilities Series
International Growth Series World Asset Allocation Series
International Growth and Income Series World Government Series
Managed Sectors Series World Growth Series
Massachusetts Investors Growth Stock Series World Total Return Series
MFS/Foreign & Colonial Emerging Markets Equity Series
</TABLE>
Market conditions will determine the value of your investment in any
Series. Each series is described in the Prospectus of the MFS/Sun Life Series
Trust.
In addition to these variable options, you may also allocate your money to
one or more of the Guarantee Periods we make available. For each Guarantee
Period, we offer a Guaranteed Interest Rate for the specified length of time.
5. EXPENSES
The charges under the Contracts are as follows:
During the first 5 years of a Contract, we impose an annual Account Fee
equal to the lesser of $35 or 2% of the value of your Contract. After the fifth
year, we may change this fee annually, but it will never exceed the lesser of
$50 or 2% of the value of your Contract. We also deduct insurance charges (which
include an administrative expense charge) equal to 1.40% per year of the average
daily value of the Contract allocated among the Sub-Accounts.
There are no sales charges when you purchase your MFS Regatta Platinum
Annuity. However, if you withdraw money from your Contract, we will, with
certain exceptions, impose a withdrawal charge. Your Contract allows a "free
withdrawal amount," which you may withdraw before you incur the withdrawal
charge. The rest of your withdrawal is subject to a withdrawal charge equal to a
percentage of each purchase payment you withdraw and is determined in accordance
with the table below. The percentage varies according to the number of Contract
years the purchase payment has been held in your account.
<TABLE>
<CAPTION>
NUMBER OF
YEARS IN ACCOUNT WITHDRAWAL CHARGE
- ----------------- -----------------------
<S> <C>
0-1 6%
2-3 5%
4-5 4%
6 3%
7 or more 0%
</TABLE>
2
<PAGE>
If you withdraw, transfer, or annuitize money allocated to a Guarantee
Period more than 30 days before the expiration date of the Guarantee Period, the
amount will be subject to a Market Value Adjustment. This adjustment reflects
the relationship between the Guaranteed Interest Rate we currently declare for
Guarantee Periods equal to the balance of your Guarantee Period (rounded to the
next higher number of complete years) for Guarantee Periods of one year or more
or your entire Guarantee Period for Guarantee Periods of less than one year, and
the Guaranteed Interest Rate applicable to the amount being withdrawn.
Generally, if your Guaranteed Interest Rate is lower than the rate currently
declared, then the adjustment will decrease your Contract value. Conversely, if
your Guaranteed Interest Rate is higher than the current rate, the adjustment
will increase your Contract value. The Market Value Adjustment will not apply to
the withdrawal of interest credited during the current year, or to transfers as
part of our dollar cost averaging program.
In addition to the charges we impose under the Contracts, there are
charges (which include management fees and operating expenses) imposed by each
Series, which range from % to % of the average net assets of the Series,
depending upon which Series you have selected. The investment adviser has agreed
to waive or reimburse a portion of expenses for some of the Series; without this
agreement, Series expenses could be higher.
The following chart is designed to help you understand the expenses you
will incur under your Contract, if you invest in one or more of the
Sub-Accounts. The column "Total Annual Expenses" shows the sum of the "Total
Annual Insurance Charges," as defined just above the chart, and the total
expenses for each Series. The next two columns show two examples of the
expenses, in dollars, you would pay under a Contract. The examples assume that
you invested $1,000 in a Contract which earns 5% annually and that you withdraw
your money (1) at the end of one year or (2) at the end of 10 years. For the
first year, the Total Annual Expenses are deducted, as well as withdrawal
charges. For year 10, the example shows the aggregate of all of the annual
expenses deducted for the 10 years, but there is no withdrawal charge.
"Total Annual Insurance Charges" include the insurance charges of 1.40%,
plus an additional 0.10%, which is used to represent the $35 annual Account Fee
based on an assumed Contract value of $35,000. The actual impact of the Account
Fee may be greater or less than 0.10%, depending upon the value of your
Contract.
<TABLE>
<CAPTION>
EXAMPLES:
TOTAL ANNUAL TOTAL ANNUAL TOTAL TOTAL EXPENSES
INSURANCE SERIES ANNUAL AT END
SUB-ACCOUNT CHARGES EXPENSES EXPENSES 1 YEAR 10 YEARS
- ------------------------------------------------ ---------------- --------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
1.50%
Bond Series (1.40% + 0.10%)
1.50%
Capital Appreciation Series (1.40% + 0.10%)
1.50%
Capital Opportunities Series (1.40% + 0.10%)
1.50%
Conservative Growth Series (1.40% + 0.10%)
1.50%
Emerging Growth Series (1.40% + 0.10%)
1.50%
Equity Income Series (1.40% + 0.10%)
1.50%
Government Securities Series (1.40% + 0.10%)
1.50%
High Yield Series (1.40% + 0.10%)
1.50%
International Growth Series (1.40% + 0.10%)
1.50%
International Growth and Income Series (1.40% + 0.10%)
1.50%
Managed Sectors Series (1.40% + 0.10%)
1.50%
Massachusetts Investors Growth Stock Series (1.40% + 0.10%)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES:
TOTAL ANNUAL TOTAL ANNUAL TOTAL TOTAL EXPENSES
INSURANCE SERIES ANNUAL AT END
SUB-ACCOUNT CHARGES EXPENSES EXPENSES 1 YEAR 10 YEARS
- ------------------------------------------------ ---------------- --------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
1.50%
MFS/Foreign & Colonial Emerging Markets (1.40% + 0.10%)
1.50%
Equity Series (1.40% + 0.10%)
1.50%
Money Market Series (1.40% + 0.10%)
1.50%
New Discovery Series (1.40% + 0.10%)
1.50%
Research Series (1.40% + 0.10%)
1.50%
Research Growth and Income Series (1.40% + 0.10%)
1.50%
Research International Series (1.40% + 0.10%)
1.50%
Strategic Income Series (1.40% + 0.10%)
1.50%
Total Return Series (1.40% + 0.10%)
1.50%
Utilities Series (1.40% + 0.10%)
1.50%
World Asset Allocation Series (1.40% + 0.10%)
1.50%
World Government Series (1.40% + 0.10%)
1.50%
World Growth Series (1.40% + 0.10%)
1.50%
World Total Return Series (1.40% + 0.10%)
</TABLE>
For more detailed information about Contract fees and expenses, please
refer to the fee table and discussion of Contract charges contained in the full
Prospectus which accompanies this Profile.
6. TAXES
Your earnings are not taxed until you take them out of your Contract. If
you take money out, earnings come out first and are taxed as income. If you are
younger than 59 1/2 when you take money out, you may be charged a 10% federal
penalty tax on the earnings. Annuity payments during the Income Phase are
considered in part a return of your original investment. That portion of each
payment is not taxable as income, unless your Contract is funded with pre-tax or
tax deductible dollars (such as with a pension or IRA contribution), in which
case the entire payment will be taxable. In all cases, you should consult with
your tax adviser for specific tax information.
7. ACCESS TO YOUR MONEY
You can withdraw money from your Contract at any time during the
Accumulation Phase. You may withdraw a portion of the value of your Contract in
each year without the imposition of the withdrawal charge. After we have held a
purchase payment for 7 years you may withdraw it without charge. All other
purchase payments you withdraw will be subject to a withdrawal charge ranging
from 6% to 0%. You may also be required to pay income tax and possible tax
penalties on any money you withdraw.
We do not assess a withdrawal charge upon annuitization or transfers. In
certain circumstances, we will waive the withdrawal charges for a full
withdrawal when you are confined to an eligible nursing home. In addition, there
may be other circumstances under which we may waive the withdrawal charge.
In addition to the withdrawal charge, amounts you withdraw, transfer or
annuitize from the Fixed Account before your Guarantee Period has ended may be
subject to a Market Value Adjustment.
4
<PAGE>
8. PERFORMANCE
If you invest in one or more Sub-Accounts, the value of your Contract will
increase or decrease depending upon the investment performance of the Series you
choose.
The following chart shows total returns for investment in the Sub-Accounts
where the corresponding Series has at least one full calendar year of
operations. The returns reflect all charges and deductions of the Series and
Sub-Accounts and deduction of the Annual Account Fee. They do not reflect
deduction of any withdrawal charges or premium taxes. These charges, if
included, would reduce the performance numbers shown. Past performance is not a
guarantee of future results.
<TABLE>
<CAPTION>
CALENDAR YEAR
----------------------------------------------------------------------------------------
SUB-ACCOUNT 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------------------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Series
Capital Appreciation Series
Capital Opportunities Series
Conservative Growth Series
Emerging Growth Series
Equity Income Series
Government Securities Series
High Yield Series
International Growth Series
International Growth and Income Series
Managed Sectors Series
Massachusetts Investors Growth Stock
Series
MFS/Foreign & Colonial Emerging Markets
Equity Series
Money Market Series
New Discovery Series
Research Series
Research Growth and Income Series
Research International Series
Strategic Income Series
Total Return Series
Utilities Series
World Asset Allocation Series
World Government Series
World Growth Series
World Total Return Series
</TABLE>
9. DEATH BENEFIT
If you die before the Contract reaches the Income Phase, the beneficiary
will receive a death benefit. To calculate the death benefit, we use a "Death
Benefit Date", which is the earliest date we have both due proof of death and a
written request specifying the manner of payment.
If you were 85 or younger when we issued your Contract, the death benefit
is the greatest of:
(1) the value of the Contract on the Death Benefit Date;
(2) the amount we would pay in the event of a full surrender of the
Contract on the Death Benefit Date;
(3) the value of the Contract on the most recent 7 year anniversary of the
Contract, plus any purchase payments made and adjusted for any partial
withdrawals and charges made after that anniversary;
(4) your highest Account Value on any Account Anniversary before your 81st
birthday, adjusted for subsequent purchase payments and partial
withdrawals and charges made between that Account Anniversary and the
Death Benefit Date; and
(5) your total Purchase Payments plus interest on Purchase Payments
allocated to and transfers to the Variable Account -- while they
remain in the Variable Account -- at 5% per year
5
<PAGE>
until the first day of the month following your 80th birthday, or
until the Purchase Payment or amount transferred has doubled in
amount, whichever is earlier; this amount is adjusted for partial
withdrawals.
If you were 86 or older when we issued your Contract, the death benefit is
equal to the amount set forth in (2) above, in this Section 9.
10. OTHER INFORMATION
FREE LOOK. Depending upon applicable state law, if you cancel your
Contract within 10 days after receiving it we will send you the value of your
Contract as of the day we received your cancellation request (this may be more
or less than the original purchase payment) and we will not deduct a withdrawal
charge. However, if applicable state or federal law so requires, the full amount
of any purchase payment(s) we receive will be refunded, the "free look" period
may be greater than 10 days and alternative methods of returning the Contract
may be acceptable.
NO PROBATE. In most cases, when you die, the beneficiary will receive the
death benefit without going through probate. However, avoiding probate does not
mean that the beneficiary will not have tax liability as a result of receiving
the death benefit.
WHO SHOULD PURCHASE A CONTRACT? The Contract is designed for investors
seeking long-term tax deferred accumulation of assets, generally for retirement
or other long-term purposes. The tax-deferred feature is most attractive to
investors in high federal and state income tax brackets. You should not buy a
Contract if you are looking for a short-term investment or if you cannot risk a
decrease in the value of your investment.
CONFIRMATIONS AND QUARTERLY STATEMENTS. You will receive a confirmation of
each transaction within your Contract. On a quarterly basis, you will receive a
complete statement of your transactions over the past quarter and a summary of
your account values during that period.
ADDITIONAL FEATURES. The MFS Regatta Platinum Annuity offers the following
additional convenient features, which you may choose no extra charge.
Dollar Cost Averaging -- This program lets you invest gradually in up to
12 Sub-Accounts.
Asset Allocation -- One or more asset allocation programs may be available
in connection with the Contract.
Systematic Withdrawal and Interest Out Program -- These programs allow you
to receive quarterly, semi-annual or annual payments during the Accumulation
Phase.
Portfolio Rebalancing Programs -- Under this program, we automatically
reallocate your investments in the Sub-Accounts to maintain the proportions you
select. You can elect rebalancing on a quarterly, semi-annual or annual basis.
Secured Future Program -- This program guarantees the return of your
Purchase Payment, and also allows you to allocate a portion of your investment
to one or more variable investment options.
11. INQUIRIES
If you would like more information about buying a Contract, please contact
your broker or registered representative. If you have any other questions,
please contact us at:
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TEL: TOLL FREE (800) 752-7215
IN MASSACHUSETTS (617) 348-9600
6
<PAGE>
PROSPECTUS
MAY 1, 1999
MFS REGATTA PLATINUM
Sun Life Assurance Company of Canada (U.S.) and Sun Life of Canada (U.S.)
Variable Account F offer the flexible payment deferred annuity contracts and
certificates described in this Prospectus to groups and individuals.
You may choose among 25 variable investment options and a range of fixed
options. The variable options invest in 25 series of the MFS/Sun Life Series
Trust (the "Series Fund"), a mutual fund advised by our affiliate, Massachusetts
Financial Services Company:
<TABLE>
<S> <C>
Bond Series Money Market Series
Capital Appreciation Series New Discovery Series
Capital Opportunities Series Research Series
Conservative Growth Series Research Growth and Income Series
Emerging Growth Series Research International Series
Equity Income Series Strategic Income Series
Government Securities Series Total Return Series
High Yield Series Utilities Series
International Growth Series World Asset Allocation Series
International Growth and Income Series World Government Series
Managed Sectors Series World Growth Series
Massachusetts Investors Growth Stock Series World Total Return Series
MFS/Foreign & Colonial Emerging Markets Equity Series
</TABLE>
The fixed account options are available for specified time periods, called
Guarantee Periods, and pay interest at a guaranteed rate for each period.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE SERIES
FUND. PLEASE READ THIS PROSPECTUS AND THE SERIES FUND PROSPECTUS CAREFULLY
BEFORE INVESTING AND KEEP THEM FOR FUTURE REFERENCE. THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE MFS REGATTA PLATINUM ANNUITY AND THE SERIES FUND.
We have filed a Statement of Additional Information dated May 1, 1999 (the
"SAI") with the Securities and Exchange Commission (the "SEC"), which is
incorporated by reference in this Prospectus. The table of contents for the SAI
is on page [ ] of this Prospectus. You may obtain a copy without charge by
writing to our Annuity Service Mailing Address or by telephoning (800) 752-7215
or (617) 348-9600. In addition, the SEC maintains a website (http://www.sec.gov)
that contains the SAI, material incorporated by reference, and other information
regarding companies that file with the SEC.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY US MEANS RECEIPT AT THE FOLLOWING
ADDRESS:
ANNUITY SERVICE MAILING ADDRESS, C/O SUN LIFE ASSURANCE COMPANY OF CANADA
(U.S.)
RETIREMENT PRODUCTS AND SERVICES, P.O. BOX 1024, BOSTON, MASSACHUSETTS
02103
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Special Terms
Expense Summary
Summary of Contract Expenses
Series Fund Annual Expenses
Examples
Condensed Financial Information
The MFS Regatta Platinum Annuity
Communicating To Us About Your Contract
Sun Life Assurance Company of Canada (U.S.)
The Variable Account
Variable Account Options: The MFS/Sun Life Series Trust
The Fixed Account
The Fixed Account Options: The Guarantee Periods
The Accumulation Phase
Issuing Your Contract
Amount and Frequency of Purchase Payments
Allocation of Net Purchase Payments
Your Account
Your Account Value
Variable Account Value
Fixed Account Value
Transfer Privilege
Waivers; Reduced Charges; Credits; Bonus Guaranteed Interest Rates
Optional Programs
Withdrawals, Withdrawal Charge and Market Value Adjustment
Cash Withdrawals
Withdrawal Charge
Market Value Adjustment
Contract Charges
Account Fee
Administrative Expense Charge
Mortality and Expense Risk Charge
Premium Taxes
Series Fund Expenses
Modification in the Case of Group Contracts
Death Benefit
Amount of Death Benefit
Method of Paying Death Benefit
Non-Qualified Contracts
Selection and Change of Beneficiary
Payment of Death Benefit
Due Proof of Death
The Income Phase -- Annuity Provisions
Selection of the Annuitant or Co-Annuitant
Selection of the Annuity Commencement Date
Annuity Options
Selection of Annuity Option
Amount of Annuity Payments
Exchange of Variable Annuity Units
Account Fee
Annuity Payment Rates
Annuity Options as Method of Payment for Death Benefit
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Other Contract Provisions
Exercise of Contract Rights
Change of Ownership
Voting of Series Fund Shares
Periodic Reports
Substitution of Securities
Change in Operation of Variable Account
Splitting Units
Modification
Discontinuance of New Participants
Reservation of Rights
Right to Return
Federal Tax Status
Introduction
Deductibility of Purchase Payments
Pre-Distribution Taxation of Contracts
Distributions and Withdrawals from Non-Qualified Contracts
Distribution and Withdrawals from Qualified Contracts
Withholding
Purchase of Immediate Annuity Contract and Deferred Annuity Contract
Investment Diversification and Control
Tax Treatment of the Company and the Variable Account
Qualified Retirement Plans
Pension and Profit-Sharing Plans
Tax-Sheltered Annuities
Individual Retirement Accounts
Roth IRAs
Administration of the Contracts
Distribution of the Contracts
Performance Information
Available Information
Incorporation of Certain Documents by Reference
Additional Information About the Company
Business of the Company
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Asset/Liability Management and Information About Market Risk
Sun Life (Canada)
Reinsurance
Reserves
Investments
Competition
Employees
Properties
State Regulation
Legal Proceedings
Accountants
Financial Statements
Table of Contents of Statement of Additional Information
Appendix A -- Glossary
Appendix B -- Condensed Financial Information-- Accumulation Unit Values
Appendix C -- Withdrawals, Withdrawal Charges and the Market Value Adjustment
</TABLE>
3
<PAGE>
SPECIAL TERMS
Your Contract is a legal document that uses a number of specially defined
terms. We explain most of the terms that we use in this Prospectus in the
context where they arise, and some are self-explanatory. In addition, for
convenient reference, we have compiled a list of these terms in the Glossary
included at the back of this Prospectus as Appendix A. If, while you are reading
this Prospectus, you come across a term that you do not understand, please refer
to the Glossary for an explanation.
EXPENSE SUMMARY
The purpose of the following table is to help you understand the costs and
expenses that you will bear directly and indirectly under a Contract WHEN YOU
ALLOCATE MONEY TO THE VARIABLE ACCOUNT. The table reflects expenses of the
Variable Account as well as of each Series of the Series Fund. The table should
be considered together with the narrative provided under the heading "Contract
Fees" in this Prospectus, and with the Series Fund's prospectus. In addition to
the expenses listed below, we may deduct premium taxes.
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
TRANSACTION EXPENSES
Sales Load Imposed on Purchase Payments............................................ $ 0
Deferred Sales Load (as a percentage of Purchase Payments withdrawn) (1)
Number of Account Years Purchase Payment in Account
0-1............................................................................ 6%
2-3............................................................................ 5%
4-5............................................................................ 4%
6.............................................................................. 3%
7 or more...................................................................... 0%
Transfer Fee (2)................................................................... $ 0
ANNUAL ACCOUNT FEE per Contract or Certificate (3) $ 35
VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average Variable Account
assets)
Mortality and Expense Risk Charge................................................ 1.25%
Administrative Expense Charge.................................................... 0.15%
Other Fees and Expenses of the Variable Account.................................. 0.00%
-----
Total Variable Account Annual Expenses............................................. 1.40%
</TABLE>
- ------------------------
(1) A portion of your Account may be withdrawn each year without imposition of
any withdrawal charge, and after a Purchase Payment has been in your Account
for seven Account Years it may be withdrawn free of the withdrawal charge.
(2) A Market Value Adjustment may be imposed on amounts transferred from or
within the Fixed Account.
(3) The Annual Account Fee is the lesser of $35 and 2% of your Account Value in
Account Years one through five; thereafter, the fee may be changed annually,
but it may not exceed the lesser of $50 and 2% of your Account Value.
4
<PAGE>
SERIES FUND ANNUAL EXPENSES (1)
(AS A PERCENTAGE OF SERIES FUND NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEES EXPENSES EXPENSES
------------- ----------- -----------
<S> <C> <C> <C>
Bond Series...............................................................
Capital Appreciation Series...............................................
Capital Opportunities Series..............................................
Conservative Growth Series................................................
Emerging Growth Series....................................................
Equity Income Series......................................................
Government Securities Series..............................................
High Yield Series.........................................................
International Growth Series...............................................
International Growth and Income Series....................................
Managed Sectors Series....................................................
Massachusetts Investors Growth Stock Series...............................
MFS/Foreign & Colonial Emerging Markets Equity Series.....................
Money Market Series.......................................................
New Discovery Series......................................................
Research Series...........................................................
Research Growth and Income Series.........................................
Research International Series.............................................
Strategic Income Series...................................................
Total Return Series.......................................................
Utilities Series..........................................................
World Asset Allocation Series.............................................
World Governments Series..................................................
World Growth Series.......................................................
World Total Return Series.................................................
</TABLE>
- ------------------------
(1) The information relating to Series Fund expenses was provided by the Series
Fund and we have not independently verified it. You should consult the
Series Fund prospectus for more information about Series Fund expenses
5
<PAGE>
EXAMPLES
If you surrender your Contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, assuming a 5%
annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bond Series...............................................................
Capital Appreciation Series...............................................
Capital Opportunities Series..............................................
Conservative Growth Series................................................
Emerging Growth Series....................................................
Equity Income Series......................................................
Government Securities Series..............................................
High Yield Series.........................................................
International Growth Series...............................................
International Growth and Income Series....................................
Managed Sectors Series....................................................
Massachusetts Investors Growth Stock Series...............................
MFS/Foreign & Colonial Emerging Markets Equity Series.....................
Money Market Series.......................................................
New Discovery Series......................................................
Research Series...........................................................
Research Growth and Income Series.........................................
Research International Series.............................................
Strategic Income Series...................................................
Total Return Series.......................................................
Utilities Series..........................................................
World Asset Allocation Series.............................................
World Governments Series..................................................
World Growth Series.......................................................
World Total Return Series.................................................
</TABLE>
If you do NOT surrender your Contract, or if you annuitize at the end of
the applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bond Series...............................................................
Capital Appreciation Series...............................................
Capital Opportunities Series..............................................
Conservative Growth Series................................................
Emerging Growth Series....................................................
Equity Income Series......................................................
Government Securities Series..............................................
High Yield Series.........................................................
International Growth Series...............................................
International Growth and Income Series....................................
Managed Sectors Series....................................................
Massachusetts Investors Growth Stock Series...............................
MFS/Foreign & Colonial Emerging Markets Equity Series.....................
Money Market Series.......................................................
New Discovery Series......................................................
Research Series...........................................................
Research Growth and Income Series.........................................
Research International Series.............................................
Strategic Income Series...................................................
Total Return Series.......................................................
Utilities Series..........................................................
World Asset Allocation Series.............................................
World Governments Series..................................................
World Growth Series.......................................................
World Total Return Series.................................................
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION
Ten-year historical information about the value of the units we use to
measure the variable portion of your Contract ("Variable Accumulation Units") is
included in the back of this Prospectus as Appendix B.
THE MFS REGATTA PLATINUM ANNUITY
Sun Life Assurance Company of Canada (U.S.) (the "Company", "we" or "us")
and Sun Life of Canada (U.S.) Variable Account F (the "Variable Account") offer
the MFS Regatta Platinum Annuity to groups and individuals for use in connection
with their retirement plans. The Contracts are available on a group basis and,
in certain states, may be available on an individual basis. We issue an
Individual Contract directly to the individual owner of the Contract. We issue a
Group Contract to the Owner covering all individuals participating under the
Group Contract. Each individual receives a Certificate that evidences his or her
participation under the Group Contract.
In this Prospectus, unless we state otherwise, we refer to both the owners
of Individual Contracts and participating individuals under Group Contracts as
"Participants" and we address all those Participants as "you"; we use the term
"Contracts" to include Individual Contracts, Group Contracts and Certificates
issued under Group Contracts. For the purpose of determining benefits under both
Individual Contracts and Group Contracts, we establish an Account for each
Participant, which we will refer to as "your" Account or a "Participant
Account."
The Contract provides a number of important benefits for your retirement
planning. It has an Accumulation Phase, during which you make payments under the
Contract and allocate them to one or more Variable Account or Fixed Account
options, and an Income Phase, during which we make payments based on the amount
you have accumulated. The Contract provides tax deferral, so that you do not pay
taxes on your earnings under the Contract until you withdraw them. It provides a
death benefit if you die during the Accumulation Phase. Finally, if you so
elect, during the Income Phase we will make payments to you or someone else for
life or for another period that you choose.
You choose these benefits on a variable or fixed basis or a combination of
both. When you choose variable investment options or a Variable Annuity option,
your benefits will be responsive to changes in the economic environment,
including inflationary forces and changes in rates of return available from
different types of investments. With these options, you assume all investment
risk under the Contract. When you choose a Guarantee Period in our Fixed Account
or a Fixed Annuity option, we assume the investment risk, except in the case of
early withdrawals, where you bear the risk of unfavorable interest rate changes.
You also bear the risk that the interest rates we will offer in the future and
the rates we will use in determining your Fixed Annuity may not exceed our
minimum guaranteed rate, which is 3% per year, compounded annually.
The Contracts are designed for use in connection with retirement and
deferred compensation plans, some of which qualify for favorable federal income
tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code.
The Contracts are also designed so that they may be used in connection with
certain non-tax-qualified retirement plans, such as payroll savings plans and
such other groups (trusteed or nontrusteed) as may be eligible under applicable
law. We refer to Contracts used with plans that receive favorable tax treatment
as "Qualified Contracts," and all others as "Non-Qualified Contracts."
COMMUNICATING TO US ABOUT YOUR CONTRACT
All materials sent to us, including Purchase Payments, must be sent to our
Annuity Service Mailing Address set forth on the first page of this Prospectus.
For all telephone communications, you must call (800) 752-7215 or (617)
348-9600.
Unless this Prospectus states differently, we will consider all materials
sent to us and all telephone communications to be received on the date we
actually receive them at the Annuity Service Mailing Address. However, we will
consider Purchase Payments, withdrawal requests and transfer
7
<PAGE>
instructions to be received on the next Business Day if we receive them (1) on a
day that is not a Business Day or (2) after 4:00 p.m., Eastern Time.
When we specify that notice to us must be in writing, we reserve the
right, in our sole discretion, to accept notice in another form.
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
We are a stock life insurance company incorporated under the laws of
Delaware on January 12, 1970. We do business in 48 states, the District of
Columbia, and Puerto Rico, and we have an insurance company subsidiary that does
business in New York. Our Executive Office mailing address is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481.
We are an indirect wholly-owned subsidiary of Sun Life Assurance Company
of Canada ("Sun Life (Canada)"). Sun Life (Canada) is a mutual life insurance
company incorporated pursuant to Act of Parliament of Canada in 1865 and
currently transacts business in all of the Canadian provinces and territories,
all U.S. states (except New York), the District of Columbia, Puerto Rico, the
Virgin Islands, Great Britain, Ireland, Hong Kong, Bermuda and the Philippines.
THE VARIABLE ACCOUNT
We established the Variable Account as a separate account on July 13,
1989, pursuant to a resolution of our Board of Directors. Under Delaware
insurance law and the Contract, the income, gains or losses of the Variable
Account are credited to or charged against the assets of the Variable Account
without regard to the other income, gains, or losses of the Company. These
assets are held in relation to the Contracts described in this Prospectus and
other variable annuity contracts that provide benefits that vary in accordance
with the investment performance of the Variable Account. Although the assets
maintained in the Variable Account will not be charged with any liabilities
arising out of any other business we conduct, all obligations arising under the
Contracts, including the promise to make annuity payments, are general corporate
obligations of the Company.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a specific Series of the MFS/Sun
Life Series Trust (the "Series Fund"). All amounts allocated to the Variable
Account will be used to purchase Series Fund shares as designated by you at
their net asset value. Any and all distributions made by the Series Fund with
respect to the shares held by the Variable Account will be reinvested to
purchase additional shares at their net asset value. Deductions from the
Variable Account for cash withdrawals, annuity payments, death benefits, Account
Fees, contract charges against the assets of the Variable Account for the
assumption of mortality and expense risks, administrative expenses and any
applicable taxes will, in effect, be made by redeeming the number of Series Fund
shares at their net asset value equal in total value to the amount to be
deducted. The Variable Account will be fully invested in Series Fund shares at
all times.
VARIABLE ACCOUNT OPTIONS:
THE MFS/SUN LIFE SERIES TRUST
The MFS/Sun Life Series Trust (the "Series Fund") is an open-end
management investment company registered under the Investment Company Act of
1940. Our affiliate, Massachusetts Financial Services Company ("MFS"), serves as
the investment adviser to the Series Fund.
The Series Fund is composed of 26 independent portfolios of securities,
each of which has separate investment objectives and policies. Shares of the
Series Fund are issued in 26 Series, each corresponding to one of the
portfolios. The Contracts provide for investment by the Sub-Accounts in shares
of the 25 Series of the Series Fund described below. Additional portfolios may
be added to the Series Fund which may or may not be available for investment by
the Variable Account.
BOND SERIES will primarily seek as high a level of current income as is
believed to be consistent with prudent investment risk; its secondary
objective is to seek to protect shareholder capital.
8
<PAGE>
CAPITAL APPRECIATION SERIES will seek capital appreciation by investing in
securities of all types, with a major emphasis on common stocks.
CAPITAL OPPORTUNITIES SERIES will seek capital appreciation.
CONSERVATIVE GROWTH SERIES will seek long-term growth of capital and future
income while providing more current dividend income than is normally
obtainable from a portfolio of only growth stocks by investing a
substantial proportion of its assets in the common stocks or securities
convertible into common stocks of companies believed to possess better than
average prospects for long-term growth and a smaller proportion of its
assets in securities whose principal characteristic is income production.
EMERGING GROWTH SERIES will seek to provide long-term growth of capital by
investing primarily (i.e. at least 80% of its assets under normal
circumstances) in common stocks of emerging growth companies, including
companies that MFS believes are early in their life cycle but which have
the potential to become major enterprises. Dividend and interest income
from portfolio securities, if any, is incidental to its objective of
long-term growth of capital.
EQUITY INCOME SERIES will primarily seek reasonable income by investing
mainly in income producing securities; its secondary objective is to seek
capital appreciation.
GOVERNMENT SECURITIES SERIES will seek current income and preservation of
capital by investing in U.S. Government and U.S. Government-related
Securities.
HIGH YIELD SERIES will seek high current income and capital appreciation by
investing primarily in fixed income securities of U.S. and foreign issuers
which may be in the lower rated categories or unrated (commonly known as
"junk bonds") and which may include equity features. The Series may invest
up to 100% of its net assets in these securities, which generally involve
greater risks, including volatility of price, risk to principal and income,
default risks and less liquidity, than securities in the higher rated
categories. Before you allocate Purchase Payments or transfer amounts to
the Sub-Account investing in shares of the High Yield Series, you should
review the risk disclosure in the Series Fund prospectus carefully and
consider the investment risks involved.
INTERNATIONAL GROWTH SERIES will seek capital appreciation by investing,
under normal market conditions, at least 65% of its total assets in equity
securities of companies whose principal activities are outside the United
States and which are growing at rates expected to be well above the growth
rate of the overall United States economy.
INTERNATIONAL GROWTH AND INCOME SERIES will seek capital appreciation and
current income by investing, under normal market conditions, at least 65%
of its total assets in equity securities of issuers whose principal
activities are outside the United States.
MANAGED SECTORS SERIES will seek capital appreciation by varying the
weighting of its portfolio of common stocks among certain industry sectors.
Dividend income, if any, is incidental to its objective of capital
appreciation.
MASSACHUSETTS INVESTORS GROWTH STOCK SERIES will seek to provide long-term
growth of capital and future income rather than current income.
MFS/FOREIGN & COLONIAL EMERGING MARKETS EQUITY SERIES will seek capital
appreciation by investing, under normal market conditions, at least 65% of
its total assets in equity securities of issuers whose principal activities
are located in emerging market countries.
MONEY MARKET SERIES will seek maximum current income to the extent
consistent with stability of principal by investing exclusively in money
market instruments maturing in less than 13 months. An investment in this
series is neither insured nor guaranteed by the U.S. government. There can
be no assurance that the Series will be able to maintain a stable net asset
value of $1.00 per share.
9
<PAGE>
NEW DISCOVERY SERIES will seek capital appreciation by investing in equity
securities of companies of any size which MFS believes offer superior
prospects for growth, and in particular, emphasizes companies in the
developing stages of their life cycles that offer the potential for
accelerated earnings or revenue growth.
RESEARCH SERIES will seek to provide long-term growth of capital and future
income.
RESEARCH GROWTH AND INCOME SERIES will seek to provide long-term growth of
capital, current income and growth of income.
RESEARCH INTERNATIONAL SERIES will seek capital appreciation by investing
in equity securities of companies whose principal activities are located
outside the United States, as well as other securities offering an
opportunity for capital appreciation.
STRATEGIC INCOME SERIES will seek to provide high current income by
investing in fixed income securities and will seek to take advantage of
opportunities to realize significant capital appreciation while maintaining
a high level of current income. The Series may invest up to 100% of its net
assets in lower rated bonds (commonly known as "junk bonds") that generally
involve greater risks, including volatility of price, risk to principal and
income, default risks and less liquidity, than those found in higher rated
securities. These bonds may be issued by domestic and foreign issuers, as
well as by foreign governments, and their political subdivisions. Before
you allocate Purchase Payments or transfer amounts to the Sub-Account
investing in shares of the Strategic Income Series, you should review the
risk disclosure in the Series Fund prospectus carefully and consider the
investment risks involved.
TOTAL RETURN SERIES will seek primarily to obtain above-average income
(compared to a portfolio entirely invested in equity securities) consistent
with prudent employment of capital; its secondary objective is to take
advantage of opportunities for growth of capital and income. Assets will be
allocated and reallocated from time to time between money market, fixed
income and equity securities. Under normal market conditions, at least 25%
of the Total Return Series' assets will be invested in fixed income
securities and at least 40% and no more than 75% of its assets will be
invested in equity securities.
UTILITIES SERIES will seek capital growth and current income (income above
that available from a portfolio invested entirely in equity securities) by
investing, under normal market conditions, at least 65% of its assets in
equity and debt securities issued by both domestic and foreign utility
companies.
WORLD ASSET ALLOCATION SERIES will seek total return over the long term
through investments in foreign and domestic equity and fixed income
securities and will also seek to have low volatility of share price (i.e.
net asset value per share) and reduced risk (compared to an aggressive
equity/fixed income portfolio). The Series may invest up to 70% of its net
assets (and expects to invest not more than 50% of its net assets) in
lower-rated bonds, commonly known as "junk bonds," which generally involve
greater risks, including volatility of price, risk to principal and income,
default risks and less liquidity, than securities in the higher rated
categories. Before you allocate Purchase Payments or transfer amounts to
the Sub-Account investing in shares of the World Asset Allocation Series,
you should review the risk disclosure in the Series Fund prospectus
carefully and consider the investment risks involved.
WORLD GOVERNMENTS SERIES will seek moderate current income and preservation
and growth of capital by investing in a portfolio of U.S. and Foreign
Government Securities.
WORLD GROWTH SERIES will seek capital appreciation by investing in
securities of companies worldwide growing at rates expected to be well
above the growth rate of the overall U.S. economy.
WORLD TOTAL RETURN SERIES will seek total return by investing in securities
which will provide above average current income (compared to a portfolio
invested entirely in equity securities) and
10
<PAGE>
opportunities for long-term growth of capital and income. The Series will
invest primarily in global equity and fixed income securities (i.e. those
of U.S. and non-U.S. issuers).
The Series Fund pays fees to MFS for its services pursuant to investment
advisory agreements. MFS also serves as investment adviser to each of the funds
in the MFS Family of Funds, and to certain other investment companies
established by MFS and/or us. MFS Institutional Advisers, Inc., a wholly-owned
subsidiary of MFS, provides investment advice to substantial private clients.
MFS and its predecessor organizations have a history of money management dating
from 1924. MFS operates as an autonomous organization and the obligation of
performance with respect to the investment advisory and underwriting agreements
(including supervision of the sub-advisers noted below) is solely that of MFS.
We undertake no obligation in this regard.
MFS has retained Foreign & Colonial Management Limited ("FCM") and its
subsidiary, Foreign & Colonial Emerging Markets Limited ("FCEM"), as
sub-advisers to each of the International Growth Series, the MFS/Foreign &
Colonial Emerging Markets Series and the World Growth Series.
A more detailed description of the Series Fund, its management, its
investment objectives, policies and restrictions and its expenses may be found
in the accompanying current prospectus of the Series Fund, and in the Series
Fund's Statement of Additional Information, which is available by calling
1-800-752-7215.
The Series Fund also offers its shares to other separate accounts
established by the Company and our New York subsidiary in connection with
variable annuity and variable life insurance contracts. Although we do not
anticipate any disadvantages to this arrangement, there is a possibility that a
material conflict may arise between the interests of the Variable Account and
one or more of the other separate accounts investing in the Series Fund. A
conflict may occur due to differences in tax laws affecting the operations of
variable life and variable annuity separate accounts, or some other reason. We
and the Series Fund's Board of Trustees will monitor events for such conflicts,
and, in the event of a conflict, we will take steps necessary to remedy the
conflict, including withdrawal of the Variable Account from participation in the
Series which is involved in the conflict or substitution of shares of other
Series or other mutual funds.
THE FIXED ACCOUNT
The Fixed Account is made up of all the general assets of the Company
other than those allocated to any separate account. Amounts you allocate to
Guarantee Periods become part of the Fixed Account, and are available to fund
the claims of all classes of our customers, including claims for benefits under
the Contracts.
We will invest the assets of the Fixed Account in those assets we choose
that are allowed by applicable state insurance laws. In general, these laws
permit investments, within specified limits and subject to certain
qualifications, in federal, state and municipal obligations, corporate bonds,
preferred and common stocks, real estate mortgages, real estate and certain
other investments. We intend to invest primarily in investment-grade fixed
income securities (i.e. rated by a nationally recognized rating service within
the four highest grades) or instruments we believe are of comparable quality. We
are not obligated to invest amounts allocated to the Fixed Account according to
any particular strategy, except as may be required by applicable state insurance
laws. You will not have a direct or indirect interest in the Fixed Account
investments.
THE FIXED ACCOUNT OPTIONS:
THE GUARANTEE PERIODS
You may elect one or more Guarantee Period(s) from those we make available
from time to time. We publish Guaranteed Interest Rates for each Guarantee
Period offered. We may change the Guaranteed Interest Rates we offer from time
to time, but no Guaranteed Interest Rate will ever be less than 3% per year,
compounded annually. Also, once we have accepted your allocation to a particular
Guarantee Period, we promise that the Guaranteed Interest Rate applicable to
that allocation will not change for the duration of the Guarantee Period.
11
<PAGE>
We determine Guaranteed Interest Rates in our discretion. We do not have a
specific formula for establishing the rates for different Guarantee Periods. Our
determination will be influenced by the interest rates on fixed income
investments in which we may invest with amounts allocated to the Guarantee
Periods. We will also consider other factors in determining these rates,
including regulatory and tax requirements, sales commissions and administrative
expenses borne by us, general economic trends and competitive factors. We cannot
predict the level of future interest rates.
We may from time to time in our discretion offer interest rate specials
for new Purchase Payments that are higher than the rates we are then offering
for renewals on transfers.
Early withdrawals from your allocation to a Guarantee Period, including
cash withdrawals, transfers, and commencement of an annuity, may be subject to a
Market Value Adjustment, which could decrease or increase the value of your
Account. See "Cash Withdrawals, Withdrawal Charge, and Market Value Adjustment."
THE ACCUMULATION PHASE
During the Accumulation Phase of your Contract, you make payments into
your Account, and your earnings accumulate on a tax-deferred basis. The
Accumulation Phase begins with our acceptance of your first Purchase Payment and
ends the Business Day before your Annuity Commencement Date. The Accumulation
Phase will end sooner if you surrender your Contract or die before the Annuity
Commencement Date.
ISSUING YOUR CONTRACT
When you purchase a Contract, a completed Application and the initial
Purchase Payment are sent to us for acceptance. When we accept an Individual
Contract, we issue the Contract to you. When we accept a Group Contract, we
issue the Contract to the Owner; we issue a Certificate to you as a Participant
when we accept your Application.
We will credit your initial Purchase Payment to your Account within two
business days of receiving your completed Application. If your Application is
not complete, we will notify you. If we do not have the necessary information to
complete the Application within five business days, we will send your money back
to you or ask your permission to retain your Purchase Payment until the
Application is made complete. Then we will apply the Purchase Payment within two
business days of when the Application is complete.
AMOUNT AND FREQUENCY OF PURCHASE PAYMENTS
The amount of Purchase Payments may vary; however, we will not accept an
initial Purchase Payment of less than $10,000, and each additional Purchase
Payment must be at least $1,000, unless we waive these limits. In addition, we
will not accept a Purchase Payment if your Account Value is over $1 million, or
if the Purchase Payment would cause your Account Value to exceed $1 million,
unless we have approved the Payment in advance. Within these limits, you may
make Purchase Payments at any time during the Accumulation Phase.
ALLOCATION OF NET PURCHASE PAYMENTS
You may allocate your Purchase Payments among the different Sub-Accounts
and Guarantee Periods we offer. At any time, you may have amounts allocated
among up to 18 of the available options.
In your Application, you may specify the percentage of each Purchase
Payment to be allocated to each Sub-Account or Guarantee Period. These
percentages are called your Allocation Factors. You may change the Allocation
Factors for future Payments by sending us written notice of the change, on our
required form. We will use your new Allocation Factors for the first Purchase
Payment we receive with or after we have received notice of the change, and for
all future Purchase Payments, until we receive another change notice.
12
<PAGE>
Although it is currently not our practice, we may deduct applicable
premium or similar taxes from your Purchase Payments. See "Contract Charges --
Premium Taxes." In that case, we will credit your Net Purchase Payment, which is
the Purchase Payment minus the amount of those taxes.
YOUR ACCOUNT
When we accept your first Purchase Payment, we establish an Account for
you, which we maintain throughout the Accumulation Phase of your Contract.
YOUR ACCOUNT VALUE
Your Account Value is the sum of the value of the two components of your
Contract: the Variable Account portion of your Contract ("Variable Account
Value") and the Fixed Account portion of your Contract ("Fixed Account Value").
These two components are calculated separately, as described below.
VARIABLE ACCOUNT VALUE
VARIABLE ACCUMULATION UNITS
In order to calculate your Variable Account Value, we use a measure called
a Variable Accumulation Unit for each Sub-Account. Your Variable Account Value
is the sum of your Account Value in each Sub-Account, which is the number of
your Variable Accumulation Units for that Sub-Account times the value of each
Unit.
VARIABLE ACCUMULATION UNIT VALUE
The value of each Variable Accumulation Unit is determined once on each
day that the New York Stock Exchange is open for trading (a "Business Day"), at
the close of trading, which is currently 4:00 p.m., Eastern Time. The period
that begins at the time Variable Accumulation Units are valued on a Business Day
and ends at that time on the next Business Day is called a Valuation Period. On
days other than Business Days, the value of a Variable Accumulation Unit does
not change.
The value of a Variable Accumulation Unit for a Sub-Account at the end of
any Valuation Period is equal to the value of that Sub-Account's Variable
Accumulation Units at the end of the previous Valuation Period, multiplied by a
factor -- which we call the Net Investment Factor-- which represents the net
return on the Sub-Account's assets. The Net Investment Factor is determined by
dividing (1) the net asset value of a Series share held in the Sub-Account at
the end of that Valuation Period, plus the per share amount of any dividend or
capital gains distribution made by that Series during the Valuation Period, by
(2) the net asset value per share of the Series share at the end of the previous
Valuation Period; we then deduct a factor representing the mortality and expense
risk charge and administrative expense charge. See "Contract Charges." For a
hypothetical example of how we calculate the value of a Variable Accumulation
Unit, see the Statement of Additional Information.
CREDITING AND CANCELING VARIABLE ACCUMULATION UNITS
When we receive an allocation to a Sub-Account, either from a Net Purchase
Payment or a transfer of Account Value, we credit that amount to your Account in
Variable Accumulation Units. Similarly, we cancel Variable Accumulation Units
when you transfer or withdraw amounts from a Sub-Account, or when we deduct
certain charges under the Contract. We determine the number of Units credited or
canceled by dividing the dollar amount by the Variable Accumulation Unit value
for that Sub-Account at the end of the Valuation Period during which the
transaction or charge is effective.
FIXED ACCOUNT VALUE
Your Fixed Account value is the sum of all amounts allocated to Guarantee
Periods, either from Net Purchase Payments, transfers or renewals, plus interest
credited on those amounts, and minus withdrawals, transfers out of Guarantee
Periods, and any deductions for charges under the Contract taken from your Fixed
Account Value.
13
<PAGE>
CREDITING INTEREST
We credit interest on amounts allocated to a Guarantee Period at the
applicable Guaranteed Interest Rate for the duration of the Guarantee Period.
The Guarantee Period begins the day we apply your allocation and ends when the
number of calendar years (or months if the Guarantee Period is less than one
year) in the Guarantee Period (measured from the end of the calendar month in
which the amount was allocated to the Guarantee Period) have elapsed. The last
day of the Guarantee Period is its Expiration Date. During the Guarantee Period,
we credit interest daily at a rate that yields the Guaranteed Interest Rate on
an effective annual basis.
GUARANTEE AMOUNTS
Each separate allocation you make to a Guarantee Period, together with
interest credited thereon, is called a Guarantee Amount. Each Guarantee Amount
is treated separately for purposes of determining the Market Value Adjustment.
RENEWALS
We will notify you in writing between 45 and 75 days before the Expiration
Date for any Guarantee Amount. A new Guarantee Period of the same duration will
begin automatically for that Guarantee Amount on the first day following the
Expiration Date, unless before the Expiration Date we receive (1) written notice
from you electing a different Guarantee Period from among those we then offer or
(2) instructions to transfer all or some of the Guarantee Amount to one or more
Sub-Accounts, in accordance with the transfer privilege provisions of the
Contract. Each new allocation to a Guarantee Period must be at least $1,000.
EARLY WITHDRAWALS
If you withdraw, transfer, or annuitize an allocation to a Guarantee
Period before the Expiration Date, we will apply a Market Value Adjustment to
the transaction. This could result in an increase or decrease of your Account
Value, depending on interest rates at the time. You bear the risk that you will
receive less than your principal if the Market Value Adjustment applies.
TRANSFER PRIVILEGE
PERMITTED TRANSFERS
During the Accumulation Phase, you may transfer all or part of your
Account Value to one or more Sub-Accounts or Guarantee Periods then available,
subject to the following restrictions:
- you may not make more than 12 transfers in any Account Year;
- the amount transferred from a Sub-Account must be at least $1,000
unless you are transferring your entire balance in that Sub-Account;
- your Account Value remaining in a Sub-Account must be at least $1,000;
- the amount transferred from a Guarantee Period must be the entire
Guarantee Amount, except for interest credited during the current
Account Year;
- at least 30 days must elapse between transfers to or from Guarantee
Periods;
- transfers to or from Sub-Accounts are subject to terms and conditions
that may be imposed by the Series Fund; and
- we impose additional restrictions on market timers, which are further
described below.
These restrictions do not apply to transfers made under an approved dollar
cost averaging program.
There is usually no charge imposed on transfers; however, we reserve the
right to impose a transfer charge of $15 for each transfer. Transfers out of a
Guarantee Period more than 30 days before
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<PAGE>
expiration of the period will be subject to the Market Value Adjustment
described below. Under current law there is no tax liability for transfers.
REQUESTS FOR TRANSFERS
You may request transfers in writing or by telephone. The telephone
transfer privilege is available automatically, and does not require your written
election. We will require personal identifying information to process a request
for transfer made by telephone. We will not be liable for following instructions
communicated by telephone that we reasonably believe are genuine.
If we receive your transfer request before 4:00 p.m. Eastern Time on a
Business Day, it will be effective that day. Otherwise, it will be effective the
next Business Day.
MARKET TIMERS
The Contracts are not designed for professional market timing
organizations or other entities using programmed and frequent transfers. If you
wish to employ such strategies, you should not purchase a Contract. Accordingly,
transfers may be subject to restrictions if exercised by a market timing firm or
any other third party authorized to initiate transfer transactions on behalf of
multiple Participants. In imposing such restrictions, we may, among other
things, not accept (1) the transfer instructions of any agent acting under a
power of attorney on behalf of more than one Participant, or (2) the transfer
instructions of individual Participants who have executed preauthorized transfer
forms that are submitted at the same time by market timing firms or other third
parties on behalf of more than one Participant. We will not impose these
restrictions unless our actions are reasonably intended to prevent the use of
such transfers in a manner that will disadvantage or potentially impair the
Contract rights of other Participants.
In addition, the Series Fund has reserved the right to temporarily or
permanently refuse exchange requests from the Variable Account if, in MFS'
judgment, a Series would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be adversely
affected. In particular, a pattern of exchanges that coincide with a market
timing strategy may be disruptive to a Series and therefore may be refused.
Accordingly, the Variable Account may not be in a position to effectuate
transfers and may refuse transfer requests without prior notice. We also reserve
the right, for similar reasons, to refuse or delay exchange requests involving
transfers to or from the Fixed Account.
WAIVERS; REDUCED CHARGES; CREDITS; BONUS GUARANTEED INTEREST RATES
We may reduce or waive the withdrawal charge or Account Fee, credit
additional amounts, or grant bonus Guaranteed Interest Rates in certain
situations. These situations may include sales of Contracts (1) where selling
and/or maintenance costs associated with the Contracts are reduced, such as the
sale of several Contracts to the same Participant, sales of large Contracts, and
certain group sales, and (2) to officers, directors and employees of the Company
or its affiliates, registered representatives and employees of broker-dealers
with a current selling agreement with the Company and affiliates of such
representatives and broker-dealers, employees of affiliated asset management
firms, and persons who have retired from such positions ("Eligible Employees")
and immediate family members of Eligible Employees. Eligible Employees and their
immediate family members may also purchase a Contract without regard to minimum
Purchase Payment requirements. For other situations in which withdrawal charges
may be waived, see "Withdrawals, Withdrawal Charge and Market Value Adjustment."
OPTIONAL PROGRAMS
DOLLAR COST AVERAGING
You may select, at no extra charge, a dollar cost averaging program by
allocating a minimum of $1,000 to a designated Sub-Account or to a Guarantee
Period we make available in connection with the program. Amounts allocated to
the Fixed Account under the program will earn interest at a rate declared by the
Company for the Guarantee Period you select. Each month or quarter, as you
select,
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<PAGE>
we will transfer the same amount automatically to one or more Sub-Accounts that
you choose, up to a maximum of 12 Sub-Accounts. The program continues until your
Account Value allocated to the program is depleted or you elect to stop the
program. The final amount transferred from the Fixed Account will include all
interest earned.
Only Purchase Payments may be allocated to a dollar cost averaging
program. Previously applied amounts may not be transferred to a dollar cost
averaging program. Only one dollar cost averaging program may be selected for
each Purchase Payment.
No Market Value Adjustment (either positive or negative) will apply to
amounts automatically transferred from the Fixed Account under the dollar cost
averaging program, except that if you discontinue or alter the program prior to
completion, amounts remaining in the Fixed Account will be transferred to the
Money Market Series Sub-Account and the Market Value Adjustment will be applied.
Any new allocation of a Purchase Payment to the program will be treated as
commencing a new dollar cost averaging program and is subject to the $1,000
minimum.
The main objective of a dollar cost averaging program is to minimize the
impact of short-term price fluctuations on Account Value. Since you transfer the
same dollar amount to the variable investment options at set intervals, dollar
cost averaging allows you to purchase more Variable Accumulation Units (and,
indirectly, more Series Fund shares) when prices are low and fewer Variable
Accumulation Units (and, indirectly, fewer Series Fund shares) when prices are
high. Therefore, you may achieve a lower average cost per Variable Accumulation
Unit over the long term. A dollar cost averaging program allows you to take
advantage of market fluctuations. However, it is important to understand that a
dollar cost averaging program does not assure a profit or protect against loss
in a declining market.
ASSET ALLOCATION
One or more asset allocation programs may be available in connection with
the Contracts, at no extra charge. An asset allocation program provides for the
allocation of your Account Value among the available Sub-Accounts and Guarantee
Periods. These programs will be fully described in a separate brochure. You may
elect to enter into an asset allocation program under the terms and conditions
described in the brochure.
SYSTEMATIC WITHDRAWAL AND INTEREST OUT PROGRAMS
If you have an Account Value of $10,000 or more, you may select our
Systematic Withdrawal or Interest Out Program.
Under the Systematic Withdrawal Program, you determine the amount and
frequency of regular withdrawals you would like to receive from your Fixed
and/or Variable Account Value and we will effect them automatically. Under the
Interest Out Program, we will automatically pay to you or reinvest interest
credited for all Guarantee Periods you have chosen. You may change or stop
either program at any time, by written notice to us. Withdrawals may be included
in income and subject to a 10% federal tax penalty, as well as all charges and
any Market Value Adjustment applicable upon withdrawal. You should consult your
adviser before choosing these options.
PORTFOLIO REBALANCING PROGRAM
Under the Portfolio Rebalancing Program, we transfer funds among the
Sub-Accounts to maintain the percentage allocation you have selected among these
Sub-Accounts. At your election, we will make these transfers on a quarterly,
semi-annual or annual basis.
Portfolio Rebalancing does not permit transfers to or from any Guarantee
Period.
SECURED FUTURE PROGRAM
Under this program, we divide your Purchase Payment between the Fixed
Account and the Variable Account. For the Fixed Account portion, you choose a
Guarantee Period from among those we offer, and we allocate to that Guarantee
Period the portion of your Purchase Payment necessary so
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<PAGE>
that at the end of the Guarantee Period, your Fixed Account allocation,
including interest, will equal the entire amount of your original Purchase
Payment. The remainder of the original Purchase Payment will be invested in
Sub-Accounts of your choice. At the end of the Guarantee Period, you will be
guaranteed the amount of your Purchase Payment (assuming no withdrawals), plus
you will have the benefit, if any, of the investment performance of the
Sub-Accounts you have chosen.
WITHDRAWALS, WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT
CASH WITHDRAWALS
REQUESTING A WITHDRAWAL
At any time during the Accumulation Phase you may withdraw in cash all or
any portion of your Account Value. To make a withdrawal, you must send us a
written request at our Annuity Service Mailing Address. Your request must
specify whether you want to withdraw the entire amount of your Account or, if
less, the amount you wish to withdraw.
All withdrawals may be subject to a withdrawal charge (see "Withdrawal
Charge" below) and withdrawals from your Fixed Account Value also may be subject
to a Market Value Adjustment (see "Market Value Adjustment" below). Upon request
we will notify you of the amount we would pay in the event of a full or partial
withdrawal. Withdrawals also may have adverse federal income tax consequences,
including a 10% penalty tax. See "Federal Tax Status." You should carefully
consider these tax consequences before requesting a cash withdrawal.
FULL WITHDRAWALS
If you request a full withdrawal, we calculate the amount we will pay you
as follows. We start with the total value of your Account at the end of the
Valuation Period during which we receive your withdrawal request; we deduct the
Account Fee for the Account Year in which the withdrawal is made; we add or
subtract the amount of any Market Value Adjustment applicable to your Fixed
Account Value; and finally, we deduct any applicable withdrawal charge.
A full withdrawal results in the surrender of your Contract, and
cancellation of all rights and privileges under your Contract.
PARTIAL WITHDRAWALS
If you request a partial withdrawal we will pay you the actual amount
specified in your request and then reduce the value of your Account by deducting
the amount paid, adding or deducting any Market Value Adjustment applicable to
amounts withdrawn from the Fixed Account, and deducting any applicable
withdrawal charge.
You may specify the amount you want withdrawn from each Sub-Account and/or
Guarantee Amount to which your Account is allocated. If you do not so specify,
we will deduct the total amount you request pro rata, based on your allocations
at the end of the Valuation Period during which we receive your request.
If you request a partial withdrawal that would result in your Account
Value being reduced to an amount less than the Account Fee for the Account Year
in which you make the withdrawal, we will treat it as a request for a full
withdrawal.
TIME OF PAYMENT
We will pay you the applicable amount of any full or partial withdrawal
within seven days after we receive your withdrawal request, except in cases
where we are permitted to defer payment under the Investment Company Act of 1940
and applicable state insurance law. Currently, we may defer payment of amounts
you withdraw from the Variable Account only for following periods:
- when the New York Stock Exchange is closed except weekends and holidays
or when trading on the New York Stock Exchange is restricted;
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<PAGE>
- when it is not reasonably practical to dispose of securities held by
the Series Fund or to determine the value of the net assets of the
Series Fund, because an emergency exists; or
- when an SEC order permits us to defer payment for the protection of
Participants.
We also may defer payment of amounts you withdraw from the Fixed Account for up
to six months from the date we receive your withdrawal request. We do not pay
interest on the amount of any payments we defer.
WITHDRAWAL RESTRICTIONS FOR QUALIFIED PLANS
If yours is a Qualified Contract, you should carefully check the terms of
the plan for limitations and restrictions on cash withdrawals.
Special restrictions apply to withdrawals from Contracts used for Section
403(b) annuities. See "Federal Tax Status -- Tax-Sheltered Annuities."
WITHDRAWAL CHARGE
We do not deduct any sales charge from your Purchase Payments when they
are made. However, we may impose a withdrawal charge (known as a "contingent
deferred sales charge") on certain amounts you withdraw. We impose this charge
to defray some of our expenses related to the sale of the Contracts, such as
commissions we pay to agents, the cost of sales literature, and other
promotional costs and transaction expenses.
FREE WITHDRAWAL AMOUNT
In each Account Year you may withdraw a portion of your Account Value --
which we call the "free withdrawal amount" -- before incurring the withdrawal
charge. For any year, the free withdrawal amount is equal to (1) 10% of the
amount of all Purchase Payments you have made during the last seven Account
Years, including the current Account Year (the "Annual Withdrawal Allowance"),
plus (2) the amount of all Purchase Payments made before the last seven Account
Years that you have not previously withdrawn. Any portion of the Annual
Withdrawal Allowance that you do not use in an Account Year is cumulative; that
is, it is carried forward and available for use in future years.
For convenience, we refer to Purchase Payments made during the last seven
Account Years (including the current Account Year) as "New Payments," and all
Purchase Payments made before the last seven Account Years as "Old Payments."
For example, assume you wish to make a withdrawal from your Contract in
Account Year 10. You made an initial Purchase Payment of $10,000 in Account Year
1, you made one additional Purchase Payment of $8,000 in Account Year 8, and you
have made no previous withdrawals. Your Account Value in Account Year 10 is
$35,000. The free withdrawal amount for Account Year 10 is $19,400, calculated
as follows:
- $800, which is the Annual Withdrawal Allowance for Account Year 10 (10%
of the $8,000 Purchase Payment made in Account Year 8, the only New
Payment); plus
- $8,600, which is the total of the unused Annual Withdrawal Allowances
of $1,000 for each of Account Years 1 through 7 and $800 for each of
Account Years 8 and 9 that are carried forward and available for use in
Account Year 10; plus
- $10,000, which is the amount of all Old Payments that you have not
previously withdrawn.
WITHDRAWAL CHARGE ON PURCHASE PAYMENTS
If you withdraw more than the free withdrawal amount in any Account Year,
we consider the excess amount to be withdrawn first from New Payments that you
have not previously withdrawn. We impose the withdrawal charge on the amount of
these New Payments. Thus, the maximum amount on which we will impose the
withdrawal charge in any year will never be more than the total of all New
Payments that you have not previously withdrawn.
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The amount of your withdrawal, if any, that exceeds the total of the free
withdrawal amount plus the aggregate amount of all New Payments not previously
withdrawn, is not subject to the withdrawal charge.
ORDER OF WITHDRAWAL
New Payments are withdrawn on a first-in first-out basis until all New
Payments have been withdrawn. For example, assume the same facts as in the
example above. In Account Year 10 you wish to withdraw $25,000. We attribute the
withdrawal first to the free withdrawal amount of $19,400, which is not subject
to the withdrawal charge. The remaining $5,600 is withdrawn from the Purchase
Payment made in Account Year 8 (the only New Payment) and is subject to the
withdrawal charge. The $2,400 balance of the Account Year 8 Purchase Payment
will remain in your Account. If you make a subsequent $5,000 withdrawal in
Account Year 10, $2,400 of that amount will be withdrawn from the remainder of
the Account Year 8 Purchase Payment and will be subject to the withdrawal
charge. The other $2,600 of your withdrawal (which exceeds the amount of all New
Payments not previously withdrawn) will not be subject to the withdrawal charge.
CALCULATION OF WITHDRAWAL CHARGE
We calculate the amount of the withdrawal charge by multiplying the
Purchase Payments you withdraw by a percentage. The percentage varies according
to the number of Account Years the Purchase Payment has been held in your
Account, including the year in which you made the Payment, but not the year you
withdraw it. The applicable percentages are as follows:
<TABLE>
<CAPTION>
NUMBER OF
ACCOUNT YEARS PERCENTAGE
- -------------- ---------------
<S> <C>
0-1 6%
2-3 5%
4-5 4%
6 3%
7 or more 0%
</TABLE>
For example, again using the same facts as in the example above, the
percentage applicable to the withdrawals in Account Year 10 of Purchase Payments
made in Account Year 8 would be 5%, because the number of Account Years the
Purchase Payments have been held in your Account would be two.
The withdrawal charge will never be greater than 6% of the aggregate
amount of Purchase Payments you make under the Contract.
For a Group Contract, we may modify the withdrawal charges and limits,
upon notice to the Owner of the Group Contract. However, any modification will
only apply to Accounts established after the date of the modification.
For additional examples of how we calculate withdrawal charges, please see
Appendix C.
TYPES OF WITHDRAWALS NOT SUBJECT TO WITHDRAWAL CHARGE
We do not impose a withdrawal charge on withdrawals from the Accounts of
(a) our employees, (b) employees of our affiliates, or (c) licensed insurance
agents who sell the Contracts. We also may waive withdrawal charges with respect
to Purchase Payments derived from the surrender of other annuity contracts we
issue.
If approved in your state, we will waive the withdrawal charge for a full
withdrawal if (a) at least one year has passed since we issued your Contract and
(b) you are confined to an eligible nursing home and have been confined there
for at least the preceding 180 days, or any shorter period required by your
state. An "eligible nursing home" means a licensed hospital or licensed skilled
or intermediate care nursing facility at which medical treatment is available on
a daily basis and daily medical records are kept for each patient. You must
provide us evidence of confinement in the form we determine.
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<PAGE>
We do not impose the withdrawal charge on amounts you apply to provide an
annuity, amounts we pay as a death benefit, or amounts you transfer among the
Sub-Accounts, between the Sub-Accounts and the Fixed Account, or within the
Fixed Account.
MARKET VALUE ADJUSTMENT
We will apply a market value adjustment if you withdraw or transfer
amounts from your Fixed Account Value more than 30 days before the end of the
applicable Guarantee Period. For this purpose, using Fixed Account Value to
provide an annuity is considered a withdrawal, and the Market Value Adjustment
will apply. However, we will not apply the Market Value Adjustment to automatic
transfers to a Sub-Account from a Guarantee Period as part of our dollar cost
averaging program.
We apply the Market Value Adjustment separately to each Guarantee Amount
in the Fixed Account, that is to each separate allocation you have made to a
Guarantee Period together with interest credited on that allocation. However, we
do not apply the adjustment to the amount of interest credited during your
current Account Year. Any withdrawal from a Guarantee Amount is attributed first
to such interest.
A Market Value Adjustment may decrease, increase or have no effect on your
Account Value. This will depend on changes in interest rates since you made your
allocation to the Guarantee Period and the length of time remaining in the
Guarantee Period. In general, if the Guaranteed Interest Rate we currently
declare for Guarantee Periods equal to the balance of your Guarantee Period (or
your entire Guarantee Period for Guarantee Periods of less than one year) is
higher than your Guaranteed Interest Rate, the Market Value Adjustment is likely
to decrease your Account Value. If our current Guaranteed Interest Rate is
lower, the Market Value Adjustment is likely to increase your Account Value.
We determine the amount of the Market Value Adjustment by multiplying the
amount that is subject to the adjustment by the following formula:
<TABLE>
<S> <C>
N/12
1 +
I
( ----- ) -1
1 + J
+ b
</TABLE>
where:
I is the Guaranteed Interest Rate applicable to the Guarantee Amount from
which you withdraw, transfer or annuitize;
J is the Guaranteed Interest Rate we declare at the time of your
withdrawal, transfer or annuitization for Guarantee Periods equal to the length
of time remaining in the Guarantee Period applicable to your Guarantee Amount,
rounded to the next higher number of complete years, for Guarantee Periods of
one year or more. For any Guarantee Periods of less than one year, J is the
Guaranteed Interest Rate we declare at the time of your withdrawal, transfer or
annuitization for a Guarantee Period of the same length as your Guarantee
Period. If, at that time, we do not offer the applicable Guarantee Period we
will use an interest rate determined by straight-line interpolation of the
Guaranteed Interest Rates for the Guarantee Periods we do offer);
N is the number of complete months remaining in your Guarantee Period; and
b is a factor that currently is 0% but that in the future we may increase
to up to 0.25%. Any increase would be applicable only to Participants who
purchase their Contracts after the date of that increase.
We will apply the Market Value Adjustment to the amount being withdrawn
after deduction of any Account Fee, if applicable, but before we impose any
withdrawal charge on the amount withdrawn.
For examples of how we calculate the Market Value Adjustment, see Appendix
C.
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CONTRACT CHARGES
ACCOUNT FEE
Each year during the Accumulation Phase of your Contract we will deduct
from your Account an Account Fee to help cover the administrative expenses we
incur related to the issuance of Contracts and the maintenance of Accounts. We
deduct the Account Fee on each Account Anniversary, which is the anniversary of
the first day of the month after we issue your Contract. In Account Years 1
through 5, the Account Fee is equal to the lesser of (a) $35 and (b) 2% of your
Account Value. After Account Year 5, we may change the Account Fee each year,
but the Account Fee will never exceed the lesser of (a) $50 and (b) 2% of your
Account Value. We deduct the Account Fee pro rata from each Sub-Account and each
Guarantee Amount, based on the allocation of your Account Value on your Account
Anniversary.
We will not charge you the Account Fee if:
(1) your Account has been allocated only to the Fixed Account during the
applicable Account Year; or
(2) your Account Value is more than $75,000 on your Account Anniversary.
If you make a full withdrawal of your Account, we will deduct the full
amount of the Account Fee at the time of the withdrawal. In addition, on the
Annuity Commencement Date we will deduct a pro rata portion of the Account Fee
to reflect the time elapsed between the last Account Anniversary and the day
before the Annuity Commencement Date.
After the Annuity Commencement Date we will deduct an annual Account Fee
of $35 in the aggregate in equal amounts from each Variable Annuity payment we
make during the year. We do not deduct any fee from Fixed Annuity payments.
ADMINISTRATIVE EXPENSE CHARGE
We deduct an administrative expense charge from the assets of the Variable
Account at an annual effective rate equal to 0.15% during both the Accumulation
Phase and the Income Phase. This charge is designed to reimburse expenses we
incur in administering the Contracts, the Accounts and the Variable Account that
are not that covered by the Account Fee.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a mortality and expense charge from the assets of the Variable
Account at an effective annual rate equal to 1.25% during both the Accumulation
Phase and the Income Phase. The mortality risk we assume arises from our
contractual obligation to continue to make annuity payments to each Annuitant
regardless of how long the Annuitant lives and regardless of how long all
Annuitants as a group live. This obligation assures each Annuitant that neither
the longevity of fellow Annuitants nor an improvement in life expectancy
generally will have an adverse effect on the amount of any annuity payment
received under the contract. The expense risk we assume is the risk that the
Account Fee and administrative expense charge we assess under the Contracts may
be insufficient to cover the actual total administrative expenses we incur. If
the amount of the charge is insufficient to cover the mortality and expense
risks, we will bear the loss. If the amount of the charge is more than
sufficient to cover the risks, we will make a profit on the charge. We may use
this profit for any proper corporate purpose, including the payment of marketing
and distribution expenses for the Contracts.
PREMIUM TAXES
Some states and local jurisdictions impose a premium tax on us that is
equal to a specified percentage of the Purchase Payments you make. In many
states there is no premium tax. We believe that the amounts of applicable
premium taxes currently range from 0% to 3.5%. You should consult a tax adviser
to find out if your state imposes a premium tax and the amount of any tax.
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<PAGE>
In order to reimburse us for the premium tax we may pay on Purchase
Payments, our policy is to deduct the amount of such taxes from the amount you
apply to provide an annuity at the time of annuitization. However, we reserve
the right to deduct the amount of any applicable tax from your Account at any
time, including at the time you make a Purchase Payment or make a full or
partial withdrawal. We do not make any profit on the deductions we make to
reimburse premium taxes.
SERIES FUND EXPENSES
There are fees and charges deducted from each Series of the Series Fund.
These fees and expenses are described in the Series Fund's Prospectus and
Statement of Additional Information.
MODIFICATION IN THE CASE OF GROUP CONTRACTS
For Group Contracts, we may modify the Account Fee, the administrative
expense charge and the mortality and expense risk charge upon notice to Owners.
However, such modification will apply only with respect to Participant Accounts
established after the effective date of the modification.
DEATH BENEFIT
If you die during the Accumulation Phase, we will pay a death benefit to
your Beneficiary, using the payment method elected (a single cash payment or one
of our Annuity Options). If the Beneficiary is not living on the date of death,
we will pay the death benefit in one sum to your estate. We do not pay a death
benefit if you die during the Income Phase. However, the Beneficiary will
receive any payments provided under an Annuity Option that is in effect.
If you have a Non-Qualified Contract and your spouse is your Beneficiary,
upon your death your spouse may elect to continue the Contract as the
Participant, rather than receive the death benefit. In that case, the death
benefit provisions of the Contract will not apply until the death of your
spouse.
AMOUNT OF DEATH BENEFIT
To calculate the amount of your death benefit, we use a "Death Benefit
Date." The Death Benefit Date is the date we receive proof of your death in an
acceptable form ("Due Proof of Death") if you have elected a death benefit
payment method before your death and it remains effective. Otherwise, the Death
Benefit Date is the later of the date we receive Due Proof of Death or the date
we receive the Beneficiary's election of payment method. If we do not receive
the Beneficiary's election within 60 days after we receive Due Proof of Death,
the Death Benefit Date will be the last day of the 60 day period.
The amount of the death benefit is determined as of the Death Benefit
Date.
If you were 85 or younger on your Contract Date (the date we accepted your
first Purchase Payment), the death benefit will be the greatest of the following
amounts:
1. Your Account Value for the Valuation Period during which the Death
Benefit Date occurs;
2. The amount we would pay if you had surrendered your entire Account on
the Death Benefit Date;
3. Your Account Value on the Seven-Year Anniversary immediately before
the Death Benefit Date, adjusted for subsequent Purchase Payments and
partial withdrawals and charges made between the Seven-Year
Anniversary and the Death Benefit Date;
4. Your highest Account Value on any Account Anniversary before your 81st
birthday, adjusted for subsequent Purchase Payments and partial
withdrawals and charges made between that Account Anniversary and the
Death Benefit Date; and
5. Your total Purchase Payments plus the following interest accruals,
adjusted for partial withdrawals; interest will accrue on Purchase
Payments allocated to and transfers to the Variable Account while they
remain in the Variable Account at 5% per year until the first day of
the
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<PAGE>
month following your 80th birthday, or until the Purchase Payment or
amount transferred has doubled in amount, whichever is earlier.
If you were 86 or older on your Contract Date, the death benefit is equal
to amount (2) above, which may be less than your Account Value.
In calculating the death benefit amount payable under (3), (4), and (5),
any partial withdrawals will reduce the amount by the ratio of the Account Value
immediately following the withdrawal to the Account Value immediately before the
withdrawal.
If the death benefit we pay is amount (2), (3), (4), or (5), your Account
Value will be increased by the excess, if any, of that amount over amount (1),
and the increase will be allocated to the Sub-Accounts in proportion to your
Account Value in those Sub-Accounts on the Death Benefit Date. If none of your
Account Value is allocated to the Sub-Accounts, the entire increase will be
allocated to the Money Market Series Sub-Account.
METHOD OF PAYING DEATH BENEFIT
The death benefit may be paid in a single cash payment or as an annuity
(either fixed, variable or a combination), under one or more of our Annuity
Options. We describe the Annuity Options in this Prospectus under "Income Phase
- -- Annuity Provisions."
During the Accumulation Phase, you may elect the method of payment for the
death benefit. If no such election is in effect on the date of your death, the
Beneficiary may elect either a single cash payment or an annuity. These
elections are made by sending us a completed election form, which we will
provide. If we do not receive the Beneficiary's election within 60 days after we
receive Due Proof of Death, we will pay the death benefit in a single cash
payment.
If we pay the death benefit in the form of an Annuity Option, the
Beneficiary becomes the Annuitant under the terms of that Annuity Option.
NON-QUALIFIED CONTRACTS
If your Contract is a Non-Qualified Contract, special distribution rules
apply to the payment of the death benefit. The amount of the death benefit must
be distributed either (1) as a lump sum within five years after your death or
(2) if in the form of an annuity, over a period not greater than the life or
expected life of the "designated beneficiary" within the meaning of Section
72(s) of the Internal Revenue Code, with payments beginning no later than one
year after your death.
The person you have named a Beneficiary under your Contract, if any, will
be the "designated beneficiary." If the named Beneficiary is not living, the
Annuitant automatically becomes the designated Beneficiary.
If the designated Beneficiary is your surviving spouse, your spouse may
continue the Contract in his or her own name as Participant. To make this
election, your spouse must give us written notification within 60 days after we
receive Due Proof of Death. In that case, we will not pay a death benefit, and
the Account Value will not be increased to reflect the death benefit
calculation. The special distribution rules will then apply on the death of your
spouse.
During the Income Phase, if the Annuitant dies, the remaining value of the
Annuity Option in place must be distributed at least as rapidly as the method of
distribution under that option.
If the Participant is not a natural person, these distribution rules apply
on a change in, or the death of, any Annuitant or Co-Annuitant.
Payments made in contravention of these special rules would adversely
affect the treatment of the Contracts as annuity contracts under the Internal
Revenue Code. Neither you nor the Beneficiary may exercise rights that would
have that effect.
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<PAGE>
SELECTION AND CHANGE OF BENEFICIARY
You select your Beneficiary in your Application. You may change your
Beneficiary at any time by sending us written notice on our required form,
unless you previously made an irrevocable Beneficiary designation. A new
Beneficiary designation is not effective until we record the change.
PAYMENT OF DEATH BENEFIT
Payment of the death benefit in cash will be made within 7 days of the
Death Benefit Date, except if we are permitted to defer payment in accordance
with the Investment Company Act of 1940. If an Annuity Option is elected, the
Annuity Commencement Date will be the first day of the second calendar month
following the Death Benefit Date, and your Account will remain in effect until
the Annuity Commencement Date.
DUE PROOF OF DEATH
We accept the following as proof of any person's death:
- an original certified copy of an official death certificate;
- an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
- any other proof we find satisfactory.
THE INCOME PHASE -- ANNUITY PROVISIONS
During the Income Phase, we make regular monthly payments to your
Annuitant.
The Income Phase of your Contract begins with the Annuity Commencement
Date. On that date, we apply your Account Value, adjusted as described below,
under the Annuity Option or Options you have selected, and we make the first
payment.
Once the Income Phase begins, no lump sum settlement option is available
and you cannot change the Annuity Option selected. No cash withdrawals are
permitted during the Income Phase. You may request a full withdrawal before the
Annuity Commencement Date, which will be subject to all charges applicable on
withdrawals. See "Cash Withdrawals, Withdrawal Charge and Market Value
Adjustment."
SELECTION OF THE ANNUITANT OR CO-ANNUITANT
You select the Annuitant in your Application. The Annuitant is the person
who receives payments during the Income Phase and on whose life these payments
are based. In your Contract, the Annuity Options refer to the Annuitant as the
"Payee." If you name someone other than yourself as Annuitant and the Annuitant
dies before the Income Phase, you become the Annuitant.
In a Non-Qualified Contract, if you name someone other than yourself as
Annuitant, you may also select a Co-Annuitant. In that case, you may name either
person to be the sole Annuitant as of the Annuity Commencement Date. If the
Annuitant dies before the Income Phase, the Co-Annuitant becomes the new
Annuitant. If, before the Income Phase, the Co-Annuitant dies as well, you
become the Annuitant. Where the persons named as Annuitant and Co-Annuitant both
are living on the 30th day before the Annuity Commencement Date, and you have
not named a sole Annuitant, the Co-Annuitant will be considered the Annuitant.
When an Annuity Option has been selected as the method of paying the death
benefit, the Beneficiary is the Annuitant.
SELECTION OF THE ANNUITY COMMENCEMENT DATE
You select the Annuity Commencement Date in your Application. The
following restrictions apply to the date you may select.
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- The earliest possible Annuity Commencement date is the first day of the
month following your Contract Date.
- The latest possible Annuity Commencement Date is the first day of the
month following the Annuitant's 90th birthday or, if there is a
Co-Annuitant, the 90th birthday of the younger of the Annuitant and
Co-Annuitant.
- The Annuity Commencement Date must always be the first day of a month.
You may change the Annuity Commencement Date from time to time by sending
us written notice, with the following additional limitations:
- We must receive your notice at least 30 days before the current Annuity
Commencement Date.
- The new Annuity Commencement Date must be at least 30 days after we
receive the notice.
There may be other restrictions on your selection of the Annuity
Commencement Date imposed by your retirement plan or applicable law. For
example, in most situations, current law requires that the Annuity Commencement
Date for a Qualified Contract must be no later than April 1 following the year
the Annuitant reaches age 70 1/2 (or, for Qualified Contracts other than IRAs,
no later than April 1 following the year the Annuitant retires, if later than
the year the Annuitant reaches age 70 1/2).
ANNUITY OPTIONS
We offer the following Annuity Options for payments during the Income
Phase. Each Annuity Option may be selected for either a Variable Annuity, a
Fixed Annuity, or a combination of both. We may also agree to other settlement
options, in our discretion.
ANNUITY OPTION A -- LIFE ANNUITY
We provide monthly payments during the lifetime of the Annuitant. Annuity
payments stop when the Annuitant dies. There is no provision for continuation of
any payments to a Beneficiary.
ANNUITY OPTION B -- LIFE ANNUITY WITH 60, 120, 180 OR 240 MONTHLY PAYMENTS
CERTAIN
We make monthly payments during the lifetime of the Annuitant. In
addition, we guarantee that the Beneficiary will receive monthly payments for
the remainder of the period certain, if the Annuitant dies during that period.
The election of a longer period results in smaller monthly payments. If no
Beneficiary is designated, we pay the discounted value of the remaining payments
in one sum to the Annuitant's estate. The Beneficiary may also elect to receive
the discounted value of the remaining payments in one sum. The discount rate for
a Variable Annuity will be the Assumed Interest Rate (3%); the discount rate for
a Fixed Annuity will be the same interest rate we used to determine the amount
of each payment.
ANNUITY OPTION C -- JOINT AND SURVIVOR ANNUITY
We make monthly payments during the lifetime of the Annuitant and another
person you designate and during the lifetime of the survivor of the two. We stop
making payments with the last payment before the death of the survivor. There is
no provision for continuance of any payments to a Beneficiary.
ANNUITY OPTION D -- MONTHLY PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
We make monthly payments for a specified period of time from 5 to 30
years, as you elect. If the Annuitant dies during the period selected, the
remaining income payments are made as described under Annuity Option B. The
election of this Annuity Option may result in the imposition of a penalty tax.
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SELECTION OF ANNUITY OPTION
You select one or more of the Annuity Options, which you may change from
time to time during the Accumulation Phase, as long as we receive your selection
or change in writing at least 30 days before the Annuity Commencement Date. If
we have not received your written selection on the 30th day before the Annuity
Commencement Date, you will receive Annuity Option B, for a life annuity with
120 monthly payments certain.
You may specify the proportion of your Adjusted Account Value you wish to
provide a Variable Annuity or a Fixed Annuity. Under a Variable Annuity, the
dollar amount of payments will vary, while under a Fixed Annuity, the dollar
amount of payments will remain the same. If you do not specify a Variable or
Fixed Annuity, your Adjusted Account Value will be divided between Variable and
Fixed Annuities in the same proportions as your Account Value was divided
between the Variable and Fixed Accounts on the Annuity Commencement Date. You
may allocate your Adjusted Account Value applied to a Variable Annuity among the
Sub-Accounts, or we will use your existing allocations.
There may be additional limitations on the options you may elect under
your particular retirement plan or applicable law.
REMEMBER THAT THE ANNUITY OPTIONS MAY NOT BE CHANGED DURING THE INCOME
PHASE.
AMOUNT OF ANNUITY PAYMENTS
ADJUSTED ACCOUNT VALUE
The Adjusted Account Value is the amount we apply to provide a Variable
Annuity and/or a Fixed Annuity. We calculate Adjusted Account Value by taking
your Account Value on the Business Day just before the Annuity Commencement Date
and making the following adjustments:
- We deduct a proportional amount of the Account Fee, based on the
fraction of the current Account Year that has elapsed;
- If applicable, we apply the Market Value Adjustment to your Account
Value in the Fixed Account, which may result in a deduction, an
addition, or no change; and
- We deduct any applicable premium or similar tax if not previously
deducted.
VARIABLE ANNUITY PAYMENTS
Variable Annuity payments may vary each month. We determine the dollar
amount of the first payment using the portion of your Adjusted Account Value
applied to a Variable Annuity and the Annuity Payment Rates in your Contract,
which are based on an assumed interest rate of 3% per year, compounded annually.
See "Annuity Payment Rates."
To calculate the remaining payments, we convert the amount of the first
payment into Annuity Units for each Sub-Account; we determine the number of
those Annuity Units by dividing the portion of the first payment attributable to
the Sub-Account by the Annuity Unit Value of that Sub-Account for the Valuation
Period ending just before the Annuity Commencement Date. This number of Annuity
Units for each Sub-Account will remain constant (unless the Annuitant requests
an exchange of Annuity Units). However, the dollar amount of the next Variable
Annuity payment -- which is the sum of the number of Annuity Units for each
Sub-Account times its Annuity Unit Value for the Valuation Period ending just
before the date of the payment -- will increase, decrease, or remain the same,
depending on the net investment return of the Sub-Accounts.
If the net investment return of the Sub-Accounts selected is the same as
the assumed interest rate of 3%, compounded annually, the payments will remain
level. If the net investment return exceeds the assumed interest rate, payments
will increase and, conversely, if it is less than the assumed interest rate,
payments will decrease.
Please refer to the Statement of Additional Information for more
information about calculating Variable Annuity Units and Variable Annuity
payments, including examples of these calculations.
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FIXED ANNUITY PAYMENTS
Fixed Annuity payments are the same each month. We determine the dollar
amount of each Fixed Annuity payment using the fixed portion of your Adjusted
Account Value and the applicable Annuity Payment Rates. These will be either (1)
the rates in your Contract, which are based on a minimum guaranteed interest
rate of 3% per year, compounded annually, or (2) new rates we have published and
are using on the Annuity Commencement Date, if they are more favorable. See
"Annuity Payment Rates."
MINIMUM PAYMENTS
If your Adjusted Account Value is less than $2,000, or the first annuity
payment for any Annuity Option is less than $20, we will pay the Adjusted
Account Value to the Annuitant in one payment.
EXCHANGE OF VARIABLE ANNUITY UNITS
During the Income Phase, the Annuitant may exchange Annuity Units from one
Sub-Account to another, up to 12 times each Account Year. To make an exchange,
the Annuitant sends us a written request stating the number of Annuity Units in
the Sub-Account he or she wishes to be exchanged and the new Sub-Account for
which Annuity Units are requested. The number of new Annuity Units will be
calculated so the dollar amount of an annuity payment on the date of the
exchange would not be affected. To calculate this number, we use Annuity Unit
values for the Valuation Period during which we receive the exchange request.
We permit only exchanges among Sub-Accounts. No exchanges to or from a
Fixed Annuity are permitted.
ACCOUNT FEE
During the Income Phase, we deduct the annual Account Fee of $35 in equal
amounts from each Variable Annuity Payment. We do not deduct the Account Fee
from Fixed Annuity payments.
ANNUITY PAYMENT RATES
The Contract contains Annuity Payment Rates for each Annuity Option
described in this Prospectus. The rates show, for each $1,000 applied, the
dollar amount of: (a) the first monthly Variable Annuity payment based on the
assumed interest rate specified in the applicable Contract (at least 3% per
year, compounded annually); and (b) the monthly Fixed Annuity payment, when this
payment is based on the minimum guaranteed interest rate specified in the
Contract (at least 3% per year, compounded annually). We may change these rates
under Group Contracts for Accounts established after the effective date of such
change (See "Other Contract Provisions -- Modification").
The Annuity Payment Rates may vary according to the Annuity Option elected
and the adjusted age of the Annuitant. The Contract also describes the method of
determining the adjusted age of the Annuitant. The mortality table used in
determining the Annuity Payment Rates for Options A, B and C is the 1983
Individual Annuitant Mortality Table.
ANNUITY OPTIONS AS METHOD OF PAYMENT FOR DEATH BENEFIT
You or your Beneficiary may also select one or more Annuity Options to be
used in the event of your death before the Income Phase, as described under the
Death Benefit section of this Prospectus. In that case, your Beneficiary will be
the Annuitant. The Annuity Commencement Date will be the first day of the second
month beginning after the Death Benefit Date.
OTHER CONTRACT PROVISIONS
EXERCISE OF CONTRACT RIGHTS
An individual Contract belongs to the individual to whom the Contract is
issued. A Group Contract belongs to the Owner. In the case of a Group Contract,
the Owner may expressly reserve all
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Contract rights and privileges; otherwise, each Participant will be entitled to
exercise such rights and privileges. In any case, such rights and privileges can
be exercised without the consent of the Beneficiary (other than an irrevocably
designated Beneficiary) or any other person. Such rights and privileges may be
exercised only during the lifetime of the Participant before the Annuity
Commencement date, except as the Contract otherwise provides.
The Annuitant becomes the Payee on and after the Annuity Commencement
Date. The Beneficiary becomes the Payee on the death of the Participant prior to
the Annuity Commencement date, or on the death of the Annuitant after the
Annuity Commencement Date. Such Payee may thereafter exercise such rights and
privileges, if any, of ownership which continue.
CHANGE OF OWNERSHIP
Ownership of a Qualified Contract may not be transferred except to: (1)
the Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Internal Revenue Code; (3) the
employer of the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee
of an individual retirement account plan qualified under Section 408 of the
Internal Revenue Code for the benefit of the Participants under a Group
Contract; or (5) as otherwise permitted from time to time by laws and
regulations governing the retirement or deferred compensation plans for which a
Qualified Contract may be issued. Subject to the foregoing, a Qualified Contract
may not be sold, assigned, transferred, discounted or pledged as collateral for
a loan or as security for the performance of an obligation or for any other
purpose to any person other than the Company.
The Owner of a Non-Qualified Contract may change the ownership of the
Contract prior to the last Annuity Commencement Date; and each Participant, in
like manner, may change the ownership interest in a Contract. A change of
ownership will not be binding on us until we receive written notification. When
we receive such notification, the change will be effective as of the date on
which the request for change was signed by the Owner or Participant, as
appropriate, but the change will be without prejudice to us on account of any
payment we make or any action we take before receiving the change. If you change
the Owner of a Non-Qualified Contract, you will become immediately liable for
the payment of taxes on any gain realized under the Contract prior to the change
of ownership, including possible liability for a 10% federal excise tax.
VOTING OF SERIES FUND SHARES
We will vote Series Fund shares held by the Sub-Accounts at meetings of
shareholders of the Series Fund or in connection with similar solicitations, but
will follow voting instructions received from persons having the right to give
voting instructions. During the Accumulation Phase, you will have the right to
give voting instructions, except in the case of a Group Contract where the Owner
has reserved this right. During the Income Phase, the Payee -- that is the
Annuitant or Beneficiary entitled to receive benefits -- is the person having
such voting rights. We will vote any shares attributable to us and Series Fund
shares for which no timely voting instructions are received in the same
proportion as the shares for which we receive instructions from Owners,
Participants and Payees, as applicable.
Owners of Qualified Contracts issued on a group basis may be subject to
other voting provisions of the particular plan and of the Investment Company Act
of 1940. Employees who contribute to plans that are funded by the Contracts may
be entitled to instruct the Owners as to how to instruct us to vote the Series
Fund shares attributable to their contributions. Such plans may also provide the
additional extent, if any, to which the Owners shall follow voting instructions
of persons with rights under the plans. If no voting instructions are received
from any such person with respect to a particular Participant Account, the Owner
may instruct the Company as to how to vote the number of Series Fund shares for
which instructions may be given.
Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under plans, other than rights afforded by the Investment Company
Act of 1940, or any duty to inquire as to the instructions received
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or the authority of Owners, Participants or others, as applicable, to instruct
the voting of Series Fund shares. Except as the Variable Account or the Company
has actual knowledge to the contrary, the instructions given by Owners under
Group Contracts and Payees will be valid as they affect the Variable Account,
the Company and any others having voting instruction rights with respect to the
Variable Account.
All Series Fund proxy material, together with an appropriate form to be
used to give voting instructions, will be provided to each person having the
right to give voting instructions at least ten days prior to each meeting of the
shareholders of the Series Fund. We will determine the number of Series Fund
shares as to which each such person is entitled to give instructions on a date
not more than 90 days prior to each such meeting. Prior to the Annuity
Commencement Date, the number of Series Fund shares as to which voting
instructions may be given to the Company is determined by dividing the value of
all of the Variable Accumulation Units of the particular Sub-Account credited to
the Participant Account by the net asset value of one Series Fund share as of
the same date. On or after the Annuity Commencement Date, the number of Series
Fund shares as to which such instructions may be given by a Payee is determined
by dividing the reserve held by the Company in the Sub-Account with respect to
the particular Payee by the net asset value of a Series Fund share as of the
same date. After the Annuity Commencement Date, the number of Series Fund shares
as to which a Payee is entitled to give voting instructions will generally
decrease due to the decrease in the reserve.
PERIODIC REPORTS
During the Accumulation Period we will send you, or such other person
having voting rights, at least once during each Account Year, a statement
showing the number, type and value of Accumulation Units credited to your
Account and the Fixed Accumulation Value of your Account, which statement shall
be accurate as of a date not more than two months previous to the date of
mailing. These periodic statements contain important information concerning your
transactions with respect to a Contract. It is your obligation to review each
such statement carefully and to report to us, at the address or telephone number
provided on the statement, any errors or discrepancies in the information
presented therein within 60 days of the date of such statement. Unless we
receive notice of any such error or discrepancy from you within such period, we
may not be responsible for correcting the error or discrepancy.
In addition, every person having voting rights will receive such reports
or prospectuses concerning the Variable Account and the Series Fund as may be
required by the Investment Company Act of 1940 and the Securities Act of 1933.
We will also send such statements reflecting transactions in your Account as may
be required by applicable laws, rules and regulations.
Upon request, we will provide you with information regarding fixed and
variable accumulation values.
SUBSTITUTION OF SECURITIES
Shares of any or all Series of the Series Fund may not always be available
for investment under the Contract. We may add or delete Series or other
investment companies as variable investment options under the Contracts. We may
also substitute for the shares held in any Sub-Account shares of another Series
or shares of another registered open-end investment company or unit investment
trust, provided that the substitution has been approved , if required, by the
Commission. In the event of any substitution pursuant to this provision, we may
make appropriate endorsement to the Contract to reflect the substitution.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At our election and subject to any necessary vote by persons having the
right to give instructions with respect to the voting of Series Fund shares held
by the Sub-Accounts, the Variable Account may be operated as a management
company under the Investment Company Act of 1940 or it may be deregistered under
the Investment Company Act of 1940 in the event registration is no longer
required. Deregistration of the Variable Account requires an order by the
Securities and Exchange Commission.
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In the event of any change in the operation of the Variable Account pursuant to
this provision, we may make appropriate endorsement to the Contract to reflect
the change and take such other action as may be necessary and appropriate to
effect the change.
SPLITTING UNITS
We reserve the right to split or combine the value of Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of the Contract.
MODIFICATION
Upon notice to the Participant, in the case of an Individual Contract, and
the Owner and Participant(s), in the case of a Group Contract (or the Payee(s)
during the Income Phase), we may modify the Contract if such modification: (i)
is necessary to make the Contract or the Variable Account comply with any law or
regulation issued by a governmental agency to which the Company or the Variable
Account is subject; (ii) is necessary to assure continued qualification of the
Contract under the Internal Revenue Code or other federal or state laws relating
to retirement annuities or annuity contracts; (iii) is necessary to reflect a
change in the operation of the Variable Account or the Sub-Account(s) (See
"Change in Operation of Variable Account"); (iv) provides additional Variable
Account and/or fixed accumulation options; or (v) as may otherwise be in the
best interests of Owners, Participants, or Payees, as applicable. In the event
of any such modification, we may make appropriate endorsement in the Contract to
reflect such modification.
In addition, upon notice to the Owner, we may modify a Group Contract to
change the withdrawal charges, Account Fees, mortality and expense risk charges,
administrative expense charges, the tables used in determining the amount of the
first monthly variable annuity and fixed annuity payments and the formula used
to calculate the Market Value Adjustment, provided that such modification
applies only to Participant Accounts established after the effective date of
such modification. In order to exercise our modification rights in these
particular instances, we must notify the Owner of such modification in writing.
The notice shall specify the effective date of such modification which must be
at least 60 days following the date we mail notice of modification. All of the
charges and the annuity tables which are provided in the Group Contract prior to
any such modification will remain in effect permanently, unless improved by the
Company, with respect to Participant Accounts established prior to the effective
date of such modification.
DISCONTINUANCE OF NEW PARTICIPANTS
We may limit or discontinue the acceptance of new Applications and the
issuance of new Certificates under a Group Contract by giving 30 days prior
written notice to the Owner. This will not affect rights or benefits with
respect to any Participant Accounts established under such Group Contract prior
to the effective date of such limitation or discontinuance.
RESERVATION OF RIGHTS
We reserve the right, to the extent permitted by law, to: (1) combine any
two or more variable accounts; (2) add or delete Series, sub-series thereof or
other investment companies and corresponding Sub-Accounts; (3) add or remove
Guarantee Periods available at any time for election by a Participant; and (4)
restrict or eliminate any of the voting rights of Participants (or Owners) or
other persons who have voting rights as to the Variable Account. Where required
by law, we will obtain approval of changes from Participants or any appropriate
regulatory authority. In the event of any change pursuant to this provision, we
may make appropriate endorsement to the Contract to reflect the change.
RIGHT TO RETURN
If you are not satisfied with your Contract, you may return it by mailing
it to us at the Annuity Service Mailing Address on the cover of this Prospectus
within ten days after it was delivered to you. When we receive the returned
Contract, it will be cancelled and we will refund to you your Account
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Value at the end of the Valuation Period during which we received it. However,
if applicable state law so requires we must return the full amount of any
Purchase Payment(s) we received, the "free look" period maybe greater than ten
days, and alternative methods of returning the Contract may be acceptable.
If you are establishing an Individual Retirement Account ("IRA"), the
Internal Revenue Code requires that we give you a disclosure statement
containing certain information about the Contract and applicable legal
requirements. We must give you this statement on or before the date the IRA is
established. If we give you the disclosure statement before the seventh day
preceding the date the IRA is established, you will not have any right of
revocation under the Code. If we give you the disclosure statement at a later
date, then you may give us a notice of revocation at any time within seven days
after your Contract Date. Upon such revocation, we will refund your Purchase
Payment(s). This right of revocation with respect to an IRA is in addition to
the return privilege set forth in the preceding paragraph. We allow a
Participant establishing an IRA a "ten day free-look," notwithstanding the
provisions of the Internal Revenue Code.
FEDERAL TAX STATUS
INTRODUCTION
This section describes general federal income tax consequences based upon
our understanding of current federal tax laws. Actual federal tax consequences
may vary depending on, among other things, the type of retirement plan with
which you use a Contract and whether (depending on the site of Contract
issuance) Puerto Rico tax law applies. Also, Congress has the power to enact
legislation affecting the tax treatment of annuity contracts, and such
legislation could apply retroactively to Contracts that you purchased before the
date of enactment. We do not make any guarantee regarding the federal, state, or
local tax status of any Contract or any transaction involving any Contract. You
should consult a qualified tax professional for advice before purchasing a
Contract or executing any other transaction (such as a rollover, distribution,
withdrawal or payment) involving a Contract.
DEDUCTIBILITY OF PURCHASE PAYMENTS
For federal income tax purposes, Purchase Payments made under
Non-Qualified Contracts are not deductible.
PRE-DISTRIBUTION TAXATION OF CONTRACTS
Generally, an increase in the value of a Contract will not give rise to
tax, prior to distribution.
However, corporate (or other non-natural person) Owners of and
Participants under a Non-Qualified Contract incur current tax, regardless of
distribution, on Contract value increases. Such current taxation does not apply,
though, to (i) immediate annuities, which the Internal Revenue Code (the "Code")
defines as a single premium contract with an annuity commencement date within
one year of the date of purchase, or (ii) any Contract that the non-natural
person holds as agent for a natural person (such as where a bank or other entity
holds a Contract as trustee under a trust agreement).
The Internal Revenue Service could assert that Owners or Participants
under both Qualified and Non-Qualified Contracts annually receive a taxable
deemed distribution equal to the cost of any life insurance benefit under the
Contract.
DISTRIBUTIONS AND WITHDRAWALS FROM NON-QUALIFIED CONTRACTS
The Account Value will include an amount attributable to Purchase
Payments, the return of which is not taxable, and an amount attributable to
investment earnings, the return of which is taxable at ordinary income rates.
The relative portions of a distribution that derive from nontaxable Purchase
Payments and taxable investment earnings depend upon the timing of the
distribution.
Upon withdrawal of less than the entire Account Value under a
Non-Qualified Contract before the Annuity Commencement Date, the Payee must
treat the distribution first as a return of investment
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earnings. The Payee may treat only distributions in excess of the amount of the
Account Value attributable to investment earnings as a return of Purchase
Payments. Account Value amounts assigned or pledged as collateral for a loan
will be treated as if withdrawn from the Contract.
If a Payee receives annuity payments under a Non-Qualified Contract after
the Annuity Commencement Date, however, the Payee treats a portion of each
payment as a nontaxable return of Purchase Payments. In general, the nontaxable
portion of such a payment bears the same ratio to the total payment as the
Purchase Payments bear to the Payee's expected return under the Contract. The
remainder of the payment constitutes a taxable return of investment earnings.
Once the Payee has received nontaxable payments in an amount equal to total
Purchase Payments, all future distributions constitute fully taxable ordinary
income. If the Annuitant dies before the Payee recovers the full amount of
Purchase Payments, the Payee may deduct an amount equal to unrecovered Purchase
Payments.
Upon the transfer of a Non-Qualified Contract by gift (other than to the
Participant's spouse), the Participant must treat an amount equal to the Account
Value minus the total amount paid for the Contract as income.
A penalty tax of 10% may apply to taxable cash withdrawals and lump-sum
payments from Non-Qualified Contracts. This penalty will not apply in certain
circumstances, such as distributions pursuant to the death of the Participant or
distributions under an immediate annuity (as defined above), or after age
59 1/2.
DISTRIBUTIONS AND WITHDRAWALS FROM QUALIFIED CONTRACTS
Generally, distributions from a Qualified Contract will constitute fully
taxable ordinary income. Also, a 10% penalty tax will, except in certain
circumstances, apply to distributions prior to age 59 1/2.
Distributions from a Qualified Contract are not subject to current
taxation, however, if:
- the distribution is not a hardship distribution or part of a series of
payments for life or for a specified period of ten years or more (an
"eligible rollover distribution"), and
- the Participant or Payee rolls over the distribution (with or without
having actually received the distribution) into a qualified retirement
plan eligible to receive the rollover.
WITHHOLDING
In the case of an eligible rollover distribution (as defined above) from a
Qualified Contract (other than from a Contract issued for use with an individual
retirement account), we (or the plan administrator) must withhold and remit to
the U.S. government 20% of the distribution unless the Participant or Payee
elects to make a direct rollover of the distribution to another qualified
retirement plan that is eligible to receive the rollover; however, only a Payee
that is the Participant or his or her spouse may elect a direct rollover. In the
case of a distribution from (i) a Non-Qualified Contract, (ii) a Qualified
Contract issued for use with an individual retirement account, or (iii) a
Qualified Contract where the distribution is not an eligible rollover
distribution, we will withhold and remit to the U.S. government a part of the
taxable portion of each distribution unless, prior to the distribution, the
Participant or Payee provides us his or her taxpayer identification number and
instructs us (in the manner prescribed) not to withhold. The Participant or
Payee may credit against his or her federal income tax liability for the year of
distribution any amounts that we (or the plan administrator) withhold.
PURCHASE OF IMMEDIATE ANNUITY CONTRACT AND DEFERRED ANNUITY CONTRACT
You should consider the following information only if you intend to
purchase an immediate annuity contract and a deferred annuity contract together.
We understand that the Treasury Department might reconsider the tax treatment of
annuity payments under an immediate annuity contract (as defined above)
purchased together with a deferred annuity contract. We believe that any adverse
change in the existing tax treatment of such immediate annuity contracts would
not apply to contracts
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issued before the Treasury Department announces the change. However, there can
be no assurance that the Treasury Department will not apply any such change
retroactively.
INVESTMENT DIVERSIFICATION AND CONTROL
The Treasury Department has issued regulations that prescribe investment
diversification requirements for mutual fund series underlying nonqualified
variable contracts. Contracts must comply with these regulations to qualify as
annuities for federal income tax purposes. Contracts that do not meet the
guidelines are subject to current taxation on annual increases in value. We
believe that each series of the Series Fund complies with these regulations. The
preamble to the regulations states that the Internal Revenue Service may
promulgate guidelines under which an owner's excessive control over investments
underlying the contract will preclude the contract from qualifying as an annuity
for federal tax purposes. We cannot predict whether such guidelines, if in fact
promulgated, will be retroactive. We will take any action (including
modification of the Contract and/or the Variable Account) necessary to comply
with any retroactive guidelines.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
As a life insurance company under the Internal Revenue Code, we will
record and report operations of the Variable Account separately from other
operations. The Variable Account will not, however, constitute a regulated
investment company or any other type of taxable entity distinct from our other
operations. We will not incur tax on the income of the Variable Account
(consisting primarily of interest, dividends, and net capital gains) if we use
this income to increase reserves under Contracts participating in the Variable
Account.
QUALIFIED RETIREMENT PLANS
You may use Qualified Contracts with several types of qualified retirement
plans. Because tax consequences will vary with the type of qualified retirement
plan and the plan's specific terms and conditions, we provide below only brief,
general descriptions of the consequences that follow from using Qualified
Contracts in connection with various types of qualified retirement plans. We
stress that the rights of any person to any benefits under these plans may be
subject to the terms and conditions of the plans themselves, regardless of the
terms of the Qualified Contracts that you are using. These terms and conditions
may include restrictions on, among other things, ownership, transferability,
assignability, contributions and distributions. Owners, Participants, Payees,
Beneficiaries and administrators of qualified retirement plans should consider,
with the guidance of a tax adviser, whether the death benefit payable under the
Contract affects the qualified status of their retirement plan.
PENSION AND PROFIT-SHARING PLANS
Sections 401(a), 401(k) and 403(a) of the Code permit business employers
and certain associations to establish various types of retirement plans for
employees. The Tax Equity and Fiscal Responsibility Act of 1982 eliminated most
differences between qualified retirement plans of corporations and those of
self-employed individuals. Self-employed persons may therefore use Qualified
Contracts as a funding vehicle for their retirement plans, as a general rule.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees
of certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts and,
subject to certain limitations, exclude the amount of purchase payments from
gross income for tax purposes. The Code imposes restrictions on cash withdrawals
from Section 403(b) annuities.
If the Contracts are to receive tax deferred treatment, cash withdrawals
of amounts attributable to salary reduction contributions (other than
withdrawals of accumulation account value as of December 31, 1988) may be made
only when the Participant attains age 59 1/2, separates from service with the
employer, dies or becomes disabled (within the meaning of Section 72(m)(7) of
the Code). These
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restrictions apply to (i) any post-1988 salary reduction contributions, (ii) any
growth or interest on post-1988 salary reduction contributions, and (iii) any
growth or interest on pre-1989 salary reduction contributions that occurs on or
after January 1, 1989. It is permissible, however, to withdraw post-1988 salary
reduction contributions in cases of financial hardship. While the Internal
Revenue Service has not issued specific rules defining financial hardship, we
expect that to qualify for a hardship distribution, the Participant must have an
immediate and heavy bona fide financial need and lack other resources reasonably
available to satisfy the need. Hardship withdrawals (as well as certain other
premature withdrawals) will be subject to a 10% tax penalty, in addition to any
withdrawal charge applicable under the Contracts. Under certain circumstances
the 10% tax penalty will not apply if the withdrawal is for medical expenses.
Under the terms of a particular Section 403(b) plan, the Participant may
be entitled to transfer all or a portion of the Account Value to one or more
alternative funding options. Participants should consult the documents governing
their plan and the person who administers the plan for information as to such
investment alternatives.
INDIVIDUAL RETIREMENT ACCOUNTS
Sections 219 and 408 of the Code permit eligible individuals to contribute
to an individual retirement program, including Simplified Employee Pension
Plans, Employer/Association of Employees Established Individual Retirement
Account Trusts, and Simple Retirement Accounts. Such IRAs are subject to
limitations on contribution levels, the persons who may be eligible, and on the
time when distributions may commence. In addition, certain distributions from
some other types of retirement plans may be placed in an IRA on a tax-deferred
basis. If we sell Contracts for use with IRAs, the Internal Revenue Service or
other agency may impose supplementary information requirements. We will provide
purchasers of the Contracts for such purposes with any necessary information.
You will have the right to revoke the Contract under certain circumstances as
described in the section of this Prospectus entitled "Right to Return."
ROTH IRAS
Section 408A of the Code permits an individual to contribute to an
individual retirement program called a Roth IRA. Unlike contributions to a
traditional IRA under Section 408 of the Code, contributions to a Roth IRA are
not tax-deductible. Provided certain conditions are satisfied, distributions are
generally tax-free. Like traditional IRAs, Roth IRAs are subject to limitations
on contribution amounts and the timing of distributions. If an individual
converts a traditional IRA into a Roth IRA the full amount of the IRA is
included in taxable income. The Internal Revenue Service and other agencies may
impose special information requirements with respect to Roth IRAs. If and when
we make Contracts available for use with Roth IRAs, we will provide any
necessary information.
ADMINISTRATION OF THE CONTRACTS
We perform certain administrative functions relating to the Contracts,
Participant Accounts, and the Variable Account. These functions include, but are
not limited to, maintaining the books and records of the Variable Account and
the Sub-Accounts; maintaining records of the name, address, taxpayer
identification number, Contract number, Participant Account number and type, the
status of each Participant Account and other pertinent information necessary to
the administration and operation of the Contracts; processing Applications,
Purchase Payments, transfers and full and partial withdrawals; issuing Contracts
and Certificates; administering annuity payments; furnishing accounting and
valuation services; reconciling and depositing cash receipts; providing
confirmations; providing toll-free customer service lines; and furnishing
telephonic transfer services.
DISTRIBUTION OF THE CONTRACTS
We offer the Contracts on a continuous basis. The Contracts are sold by
licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of
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the National Association of Securities Dealers, Inc. and who have entered into
distribution agreements with the Company and the general distributor, Clarendon
Insurance Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02481, a wholly-owned subsidiary of the Company. Clarendon
is registered with the Commission under the Securities Exchange Act of 1934 as
broker-dealer and is a member of the National Association of Securities Dealers,
Inc.
Commissions and other distribution compensation will be paid by the
Company to the selling agents and will not be more than 7.34% of Purchase
Payments. In addition, after the first Account Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 1.00% of the Participant's Account Value. In
addition to commissions, the Company may, from time to time, pay or allow
additional promotional incentives, in the form of cash or other compensation. In
some instances, such other incentives may be offered only to certain
broker-dealers that sell or are expected to sell during specified time periods
certain minimum amounts of the Contracts or Certificates or other contracts
offered by the Company. Commissions will not be paid with respect to Participant
Accounts established for the personal account of employees of the Company or any
of its affiliates, or of persons engaged in the distribution of the Contracts,
or of immediate family members of such employees or persons. In addition,
commissions may be waived or reduced in connection with certain transactions
described in the Prospectus under "Waivers; Reduced Charges; Credits; Bonus
Guaranteed Interest Rates."
PERFORMANCE INFORMATION
From time to time the Variable Account may publish reports to
shareholders, sales literature and advertisements containing performance
information relating to the Sub-Accounts. This information may include "Average
Annual Total Return," "Cumulative Growth Rate" and "Cumulative Compound Growth
Rate." The Government Securities Series Sub-Account and the High Yield Series
Sub-Account may also advertise "yield." The Money Market Series Sub-Account may
advertise "yield" and "effective yield."
Average Annual Total Return measures the net income of the Sub-Account and
any realized or unrealized gains or losses of the Series in which it invests,
over the period stated. Average Annual Total Return figures are annualized and
represent the average annual percentage change in the value of an investment in
a Sub-Account over that period. Cumulative Growth Rate represents the cumulative
change in the value of an investment in the Sub-Account for the period stated,
and is arrived at by calculating the change in the Accumulation Unit Value of a
Sub-Account between the first and the last day of the period being measured. The
difference is expressed as a percentage of the Accumulation Unit Value at the
beginning of the base period. "Compound Growth Rate" is an annualized measure,
calculated by applying a formula that determines the level of return which, if
earned over the entire period, would produce the cumulative return.
Average Annual Total Return figures assume an initial purchase payment of
$1,000 and reflect all applicable withdrawal and Contract charges. The
Cumulative Growth Rate and Compound Growth Rate figures that we advertise do not
reflect withdrawal charges or the Account Fee, although they reflect all
recurring charges. Results calculated without withdrawal and/or certain Contract
charges will be higher. We may also use other types of rates of return that do
not reflect withdrawal and Contract charges.
The performance figures used by the Variable Account are based on the
actual historical performance of the Series Fund for the specified periods, and
the figures are not intended to indicate future performance. For periods before
the date the Contracts became available, we calculate the performance
information for the Sub-Account on a hypothetical basis. To do this, we reflect
deductions of the current Contract fees and charges from the historical
performance of the corresponding series.
Yield is a measure of the net dividend and interest income earned over a
specific one month or 30-day period (7-day period for the Money Market Series
Sub-Account), expressed as a percentage of the value of the Sub-Account's
Accumulation Units. Yield is an annualized figure, which means that we assume
that the Sub-Account generates the same level of net income over a one-year
period and compound that income on a semi-annual basis. We calculate the
effective yield for the Money Market
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Series Sub-Account similarly, but include the increase due to assumed
compounding. The Money Market Sub-Account's effective yield will be slightly
higher than its yield as a result of its compounding effect.
The Variable Account may also from time to time compare its investment
performance to various unmanaged indices or other variable annuities and may
refer to certain rating and other organizations in its marketing materials. More
information on performance and our computations is set forth in the Statement of
Additional Information.
The Company may also advertise the ratings and other information assigned
to it by independent industry ratings organizations. Some of these organizations
are A.M. Best, Moody's Investor's Service, Standard and Poor's Insurance Rating
Services, and Duff and Phelps. Each year A.M. Best reviews the financial status
of thousands of insurers, culminating in the assignment of Best's rating. These
ratings reflect A.M. Best's current opinion of the relevant financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health industry. Best's ratings range from A++ to F. Standard and
Poor's and Duff and Phelps' ratings measure the ability of an insurance company
to meet its obligations under insurance policies it issues. These two ratings do
not measure the insurance company's ability to meet non-policy obligations.
Ratings in general do not relate to the performance of the Sub-Accounts.
We may also advertise endorsements from organizations, individuals or
other parties that recommend the Company or the Contracts. We may occasionally
include in advertisements (1) comparisons of currently taxable and tax deferred
investment programs, based on selected tax brackets; or (2) discussions of
alternative investment vehicles and general economic conditions.
AVAILABLE INFORMATION
The Company and the Variable Account have filed with the SEC registration
statements under the Securities Act of 1933 relating to the Contracts. This
Prospectus does not contain all of the information contained in the registration
statements and their exhibits. For further information regarding the Variable
Account, the Company and the Contracts, please refer to the registration
statements and their exhibits.
In addition, the Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended. We file reports and other
information with the SEC to meet these requirements. You can inspect and copy
this information and our registration statements at the SEC's public reference
facilities at the following locations: WASHINGTON, D.C. -- 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549; CHICAGO, ILLINOIS -- 500 West Madison
Street, Chicago, IL 60661; NEW YORK, NEW YORK -- 7 World Trade Center, 13th
Floor, New York, NY 10048. The Washington, D.C. office will also provide copies
by mail at prescribed rates. You may also find these materials on the SEC's
website (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1998 filed with the SEC is incorporated by reference in this Prospectus. Any
statement contained in a document we incorporate by reference is deemed modified
or superceded to the extent that a later filed document, including this
Prospectus, shall modify or supercede that statement. Any statement so modified
or superceded shall not be deemed, except as so modified or superceded, to
constitute part of this Prospectus.
The Company will furnish, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of the documents referred to above which have been incorporated by
reference in this Prospectus, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference in this Prospectus).
Requests for such documents should be directed to the Secretary, Sun Life
Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley
Hills, Massachusetts 02481, telephone (800) 225-3950.
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ADDITIONAL INFORMATION ABOUT THE COMPANY
BUSINESS OF THE COMPANY
We are engaged in the sale of individual variable life insurance and
individual and group fixed and variable annuities. These contracts are sold in
both the tax qualified and non-tax qualified markets. These products are
distributed through individual insurance agents, insurance brokers and broker-
dealers.
We have obtained authorization to do business in forty-eight states, the
District of Columbia and Puerto Rico, and anticipate that we will be authorized
to do business in all states except New York. We have formed a wholly-owned
subsidiary, Sun Life Insurance and Annuity Company of New York, which issues
individual fixed and combination fixed/variable annuity contracts and group life
and long-term disability insurance in New York. Our other active subsidiaries
are Sun Capital Advisers, Inc., a registered investment adviser, Clarendon
Insurance Agency, Inc., a registered broker-dealer that acts as the general
distributor of the Contracts and other annuity and life insurance contracts that
we and our affiliates issue, Sun Life of Canada (U.S.) Distributors, Inc., a
registered broker-dealer and investment adviser, New London Trust, F.S.B., a
federally chartered savings bank, and Sun Life Financial Services Limited, which
provides off-shore administrative services to us and our parent, Sun Life
Assurance Company of Canada ("Sun Life (Canada)").
We are a wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings,
Inc. ("Life Holdco"), a wholly-owned subsidiary of Sun Life Assurance Company of
Canada -- U.S. Operations Holdings, Inc. ("U.S. Holdco"). U.S. Holdco is a
wholly-owned subsidiary of Sun Life (Canada), 150 King Street West, Toronto,
Ontario, Canada. Sun Life (Canada) is a mutual life insurance company
incorporated pursuant to Act of Parliament of Canada in 1865 and currently
transacts business in all of the Canadian provinces and territories, all U.S.
states (except New York), the District of Columbia, Puerto Rico, the Virgin
Islands, Great Britain, Ireland, Hong Kong, Bermuda and the Philippines.
SELECTED FINANCIAL DATA
[to be supplied]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL CONDITION
[to be supplied]
RESULTS OF OPERATIONS
[to be supplied]
LIQUIDITY
[to be supplied]
YEAR 2000 COMPLIANCE
During the fourth quarter of 1996, the Company began a comprehensive
analysis of its information technology ("IT") and non-IT systems, including its
hardware, software, data, data feed products, and internal and external
supporting services, to address the ability of these systems to correctly
process date calculations through the year 2000 and beyond. The Company created
a full-time Year 2000 project team in early 1997 to manage this endeavor across
the Company. This team, which works with dedicated personnel from all business
units and with the legal and audit departments, reports directly to the
Company's senior management on a monthly basis. In addition, the Company's Year
2000 project is periodically reviewed by internal and external auditors.
To date, relevant systems have been identified and their components
inventoried, needed resolutions have been documented, timelines and project
plans have been developed, remediation and testing
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are in process, and over 95% of Company applications have been certified as
compliant. A small number of remaining tasks will be completed in the first
quarter of 1999 to accommodate testing of vendor upgrades that were not
available until late 1998. During 1999, all interfaces certified as compliant
will be retested and mission critical functions will also be retested.
In mid-1997, the project team contacted all key vendors to obtain either
their certification for the products and services provided or their plan to make
those products and services compliant. To date, approximately 90% of these
vendors have responded, and the project team is in the process of reviewing
these responses. In addition, the project team recently has opened
communications with critical business partners, such as third-party
administrators, investment property managers, investment mortgage
correspondents, and others, with the goal that these partners will continue to
be able to support the Company's objective of assuring Year 2000 compliance.
Non-IT applications will be tested in accordance with the Company's
standard Year 2000 test strategy, including building security, HVAC systems, and
other such systems. Compliant client server and mainframe environments have been
built which allow for testing of critical dates such as December 31, 1999,
January 1, 2000, February 28, 2000, February 29, 2000, and March 1, 2000 without
impact to current production.
Although the Company expects all critical systems to be Year 2000
compliant before the end of 1999, there can be no assurance that this result
will be completely achieved. Factors giving rise to this uncertainty include
possible loss of technical resources to perform the work, failure to identify
all susceptible systems, non-compliance by third-parties whose systems and
operations affect the company, and other similar uncertainties. A possible
worst-case scenario might include one or more of the Company's significant
systems being non-compliant. Such a scenario could result in material disruption
to the company's operations. Consequences of such disruptions could include,
among other possibilities, the inability to update customers' accounts, process
payments and other financial transactions; and report accurate data to
management, customers, regulators, and others. Consequences also could include
business interruptions or shutdowns, reputational harm, increased scrutiny by
regulators, and litigation related to Year 2000 issues. Such potential
consequences, depending on their nature and duration, could have a material
impact on the Company's results of operations and financial position.
In order to mitigate the risks to the Company of material adverse
operational or financial impacts from failure to achieve planned Year 2000
compliance, the Company has established contingency planning at the business
unit and corporate levels. Each business unit has ranked its applications as
being of high, medium or low business risk to ensure that the most critical are
addressed first. The business units also have developed alternate plans of
action where possible, and established dates for the alternate plans to be
enacted. On the corporate level, the Company is in the process of enhancing its
business continuation plan, by identifying minimum requirements for facilities,
computing, staffing, and other factors; and it is developing a plan to support
those requirements.
In 1998, the Company expended, cumulatively, approximately $ million
on its Year 2000 effort, and it expects to incur a further $ million on this
effort in 1999.
CAUTIONARY STATEMENT
Statements by the Company in this Prospectus and in other contexts that
are not historical fact are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. These may include, among others,
forward-looking statements relating to Year 2000 compliance, volume growth,
market share, and financial goals. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those anticipated in the forward-looking statements, including
but not limited to the following: (1) uncertainties relating to the ability of
the Company to identify and address Year 2000 issues successfully and in a
timely manner and at costs that are reasonably in line with the Company's
estimates, and the ability of the Company's vendors, suppliers, other service
providers, and customers to identify and address successfully their own Year
2000 issues in a timely manner; (2) heightened competition, particularly with
respect to price, product features, and distribution capability, which could
constrain growth and profitability in the
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Company's businesses; (3) significant changes in interest rates and market
conditions; and (4) regulatory and legislative uncertainties and developments.
ASSET/LIABILITY MANAGEMENT AND INFORMATION ABOUT MARKET RISK
The following discussion about the Company's risk management activities
includes "forward-looking statements" that involve risk and uncertainties.
Assets within the general account are segmented by product or groups of
products. This allows the Company to better manage assets relative to
liabilities. Asset management for each segment is conducted within the context
of any investment policy, reviewed each quarter with business unit managers to
ensure that investment policy remains appropriate, taking into account a
segment's liability characteristics. The review of investment policy includes
cash flow estimates, liquidity requirements and targets for asset mix, duration
and quality.
Market risks associated with investment portfolios supporting products
that are funded by separate accounts where results are not guaranteed and where
the policyholder assumes the risks are not included in this discussion.
All of the Company's fixed interest investments are held for other than
trading purposes and generally fixed interest rate liabilities are supported by
well diversified portfolios of fixed interest investments including publicly
issued and privately placed bonds and commercial mortgage loans. Public bonds
can include Treasuries, corporates, money market instruments, and mortgage
backed securities. Credit risk is managed by the Company's underwriting
standards which have resulted in high average quality portfolios. For example,
the Company does not purchase below investment grade securities. Also, as a
result of investment policy, there is no foreign currency, commodity or equity
price risk exposure in the portfolios. However, changes in the level of domestic
interest rates will impact the market value of fixed interest assets and
liabilities. The management of interest rate risk exposure and immunization
strategies are discussed below.
Immunization strategies which minimize the loss from wide fluctuations in
interest rates are deployed in segments where the bulk of the liabilities arise
from the sale of products containing interest rate guarantees for certain terms.
These strategies are supported by investment and asset liability analytical
software acquired from outside vendors. The significant features of the
immunization framework include: an economic or market value basis for both
assets and liabilities; an option pricing methodology; the use of effective
duration and convexity to measure price sensitivity; the use of key rate
durations ("KRDs") to capture interest rate exposure to different parts of the
yield curve and manage non-parallel curve movements; and active portfolio
management, including the use of derivatives (e.g. interest rate swaps) for
portfolio restructuring.
An Interest Rate Risk Committee meets monthly and after reviewing the
duration reports for various portfolios, market conditions and forecasts, the
committee develops asset management strategies for interest sensitive
portfolios. These strategies may involve managing assets to small intentional
mismatches, either at the total effective duration level or at certain KRDs but,
in any event, the overall duration gap between interest sensitive assets and
liabilities is managed within a tolerance range of +/ -0.25 effective duration.
The estimates presented here are from computer model simulations which,
because they are predictions about the future, contain a certain degree of
uncertainty. For example, there are algorithms for assumptions about
policyholder behavior and asset cash flows and consequently estimates of
duration and market values which may or may not represent what actually will
occur. Also there is no provision in the estimates to incorporate any management
decisions which might be taken to mitigate against adverse results. The company
is sufficiently comfortable with its interest rate risk management process to
feel the exposure to interest rate changes will not materially affect the
near-term financial position, results of operations or cash flows of the
Company.
The Company's fixed interest investments had an aggregate fair value at
December 31, 1998 of $_______ million. A portion of the Company's general
account liabilities of $________ million are categorized as financial
instruments. The portion of the liabilities so categorized had a carrying value
of
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$________ million and a fair value of $_______ million at December 31, 1998.
Using modeling and analytical software, the Company performed sensitivity
analysis of its financial instruments at December 31, 1998. Assuming an
immediate increase of 100 basis points in interest rates, the net hypothetical
decrease in the fair value of the Company's assets is estimated to be $_______
million. A corresponding decrease in the fair value of the liabilities
categorized as financial instruments is estimated to be $_____ million at
December 31, 1998.
SUN LIFE (CANADA)
On January 27, 1998, the Company's ultimate parent, Sun Life (Canada),
announced that its Board of Directors had requested management to develop a plan
to convert from a mutual life insurance company into a publicly traded stock
company through demutualization. Management has put in place a full time task
force which, together with a worldwide team of actuarial, financial, and legal
advisers, has been working on a plan. It is expected that the Board of Directors
will decide in the first half of 1999 whether to proceed with demutualization.
Demutualization would require regulatory approval and approval by policyholders
of Sun Life (Canada). Based on information known to date, the potential
demutualization of Sun Life (Canada) is not expected to have any significant
impact on the Company.
REINSURANCE
The Company has agreements with Sun Life (Canada) which provide that Sun
Life (Canada) will reinsure the mortality risks of the individual life insurance
contracts previously sold by the Company. Under these agreements basic death
benefits and supplementary benefits are reinsured on a yearly renewable term
basis and coinsurance basis, respectively. Reinsurance transactions under these
agreements in 1998 had the effect of decreasing net income from operations by
$__________.
Effective January 1, 1991 the Company entered into an agreement with Sun
Life (Canada) under which certain individual life insurance contracts issued by
Sun Life (Canada) were reinsured by the Company on a 90% coinsurance basis. Also
effective January 1, 1991 the Company entered into an agreement with Sun Life
(Canada) which provides that Sun Life (Canada) will reinsure the mortality risks
in excess of $500,000 per policy for the individual life insurance contracts
assumed by the Company in the reinsurance agreement described above. Death
benefits are reinsured on a yearly renewable term basis. These agreements had
the effect of increasing income from operations by approximately $_________ for
the year ended December 31, 1998.
The life reinsurance assumed agreement requires the reinsurer to withhold
funds in an amount equal to the reserves assumed.
The Company has also executed reinsurance agreements with unaffiliated
companies. These agreements provide reinsurance of certain individual life
insurance contracts on a modified coinsurance basis under which all deficiency
reserves are ceded; as well as reinsurance for variable universal life on a
yearly renewable term basis for which the Company has a maximum retention of
$2,000,000.
RESERVES
In accordance with the life insurance laws and regulations under which the
Company operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on its outstanding
contracts. Reserves are based on mortality tables in general use in the United
States and are computed to equal amounts that, with additions from premiums to
be received, and with interest on such reserves compounded annually at certain
assumed rates, will be sufficient to meet the Company's policy obligations at
their maturities or in the event of an insured's death. In the accompanying
Financial Statements, these reserves are determined in accordance with statutory
regulations.
INVESTMENTS
Of the Company's total assets of $__ billion at December 31, 1998, ____%
($____ billion) consisted of unitized and non-unitized separate account assets,
____% ($____ billion) was invested in
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bonds and similar securities, ____% ($____ million) was invested in mortgages,
___% ($_____ million) was invested in subsidiaries, ___ % ($____ million) was
invested in real estate, and the remaining ___ % ($___ billion) was invested in
cash and other assets.
COMPETITION
The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other entities
marketing insurance products. According to the most recent Best's Review,
Life-Health Edition, as of December 31, 1997 the Company ranked __th among all
life insurance companies in the United States based upon total assets. Its
ultimate parent company, Sun Life (Canada), ranked ___th.
EMPLOYEES
The Company and Sun Life (Canada) have entered into a Service Agreement
which provides that the latter will furnish the Company, as required, with
personnel as well as certain services and facilities on a cost reimbursement
basis. As of December 31, 1998, the Company had _____ direct employees who are
employed at its Principal Executive Office in Wellesley Hills, Massachusetts and
at its Retirement Products and Services Division in Boston, Massachusetts.
PROPERTIES
The Company occupies office space owned by it and leased to Sun Life
(Canada), and certain unrelated parties for lease terms not exceeding five
years.
STATE REGULATION
The Company is subject to the laws of the State of Delaware governing life
insurance companies and to regulation by the Commissioner of Insurance of
Delaware. An annual statement is filed with the Commissioner of Insurance on or
before March lst in each year relating to the operations of the Company for the
preceding year and its financial condition on December 31st of such year. Its
books and records are subject to review or examination by the Commissioner or
his agents at any time and a full examination of its operations is conducted at
periodic intervals.
The Company is also subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed to operate. The laws of
the various jurisdictions establish supervisory agencies with broad
administrative powers with respect to licensing to transact business, overseeing
trade practices, licensing agents, approving policy forms, establishing reserve
requirements, fixing maximum interest rates on life insurance policy loans and
minimum rates for accumulation of surrender values, prescribing the form and
content of required financial statements and regulating the type and amounts of
investments permitted. Each insurance company is required to file detailed
annual reports with supervisory agencies in each of the jurisdictions in which
it does business and its operations and accounts are subject to examination by
such agencies at regular intervals.
In addition, many states regulate affiliated groups of insurers, such as
the Company, its parent and its affiliates, under insurance holding company
legislation. Under such laws, inter-company transfers of assets and dividend
payments from insurance subsidiaries may be subject to prior notice or approval,
depending on the size of such transfers and payments in relation to the
financial positions of the companies involved.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed (up to prescribed limits) for policyholder losses
incurred by insolvent companies. The amount of any future assessments of the
Company under these laws cannot be reasonably estimated. However, most of these
laws do provide that an assessment may be excused or deferred if it would
threaten an insurer's own financial strength and many permit the deduction of
all or a portion of any such assessment from any future premium or similar taxes
payable.
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed
41
<PAGE>
federal measures which may significantly affect the insurance business include
employee benefit regulation, removal of barriers preventing banks from engaging
in the insurance business, tax law changes affecting the taxation of insurance
companies, the tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. We
and our subsidiaries are engaged in various kinds of routine litigation which,
in management's judgment, is not of material importance to our respective total
assets or material with respect to the Variable Account.
ACCOUNTANTS
The financial statements of the Variable Account for the year ended
December 31, 1998 included in the Statement of Additional Information and the
statutory financial statements of the Company for the years ended December 31,
1998, 1997 and 1996 included in this Prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports appearing herein,
and are included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this
Prospectus should be considered only as bearing on the ability of the Company to
meet its obligations with respect to amounts allocated to the Fixed Account and
with respect to the death benefit and the Company's assumption of the mortality
and expense risks. They should not be considered as bearing on the investment
performance of the Series Fund shares held in the Sub-Accounts of the Variable
Account.
The financial statements of the Variable Account for the year ended
December 31, 1998 are included in the Statement of Additional Information.
42
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Calculation of Performance Data -- Average Annual Total Return.......................
Non-Standardized Investment Performance..............................................
Advertising and Sales Literature.....................................................
Calculations.........................................................................
Example of Variable Accumulation Unit Value Calculation............................
Example of Variable Annuity Unit Calculation.......................................
Example of Variable Annuity Payment Calculation....................................
Calculation of Annuity Unit Values.................................................
Distribution of the Contracts........................................................
Designation and Change of Beneficiary................................................
Custodian............................................................................
Financial Statements.................................................................
</TABLE>
43
<PAGE>
This Prospectus sets forth information about the Contracts and the
Variable Account that a prospective purchaser should know before investing.
Additional information about the Contracts and the Variable Account has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information dated May 1, 1999 which is incorporated herein by reference. The
Statement of Additional Information is available upon request and without charge
from Sun Life Assurance Company of Canada (U.S.). To receive a copy, return this
request form to the address shown below or telephone (617) 348-9600 or (800)
752-7215.
- --------------------------------------------------------------------------------
To: Sun Life Assurance Company of Canada (U.S.)
Annuity Service Mailing Address:
c/o Retirement Products and Services
P.O. Box 1024
Boston, Massachusetts 02103
Please send me a Statement of Additional Information for
MFS Regatta Platinum Variable and Fixed Annuity
Sun Life of Canada (U.S.) Variable Account F.
Name
- --------------------------------------------------------------
Address
- --------------------------------------------------------------
- -------------------------------------------------------------------------
City
- ------------------------------------ State
- -------------- Zip
- -------
Telephone
- ----------------------------------------------------------------
44
<PAGE>
APPENDIX A
GLOSSARY
The following terms as used in this Prospectus have the indicated
meanings:
ACCOUNT OR PARTICIPANT ACCOUNT: An account established for each
Participant to which Net Purchase Payments are credited.
ACCOUNT VALUE: The Variable Accumulation Value, if any, plus the Fixed
Accumulation Value, if any, of your Account for any Valuation Period.
ACCOUNT YEAR AND ACCOUNT ANNIVERSARY: Your first Account Year is the
period of (a) 12 full calendar months plus (b) the part of the calendar month in
which we issue your Contract (if not on the first day of the month), beginning
with the Contract Date. Your Account Anniversary is the first day immediately
after the end of an Account Year. Each Account Year after the first is the 12
calendar month period that begins on your Account Anniversary. If, for example,
the Contract Date is in March, the first Account Year will be determined from
the Contract Date but will end on the last day of March in the following year;
your Account Anniversary is April 1 and all Account Years after the first will
be measured from April 1.
ACCUMULATION PHASE: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant during which you make Purchase Payments
under the Contract. This is called the "Accumulation Period" in the Contract.
ANNUITANT: The person or persons to whom the first annuity payment is
made. If the Annuitant dies prior to the Annuity Commencement Date, the new
Annuitant will be the Co-Annuitant, if any. If the Co-Annuitant dies or if no
Co-Annuitant is named, the Participant becomes the Annuitant upon the
Annuitant's death prior to the Annuity Commencement Date. The Participant may
not designate a "Co-Annuitant" unless the Participant and Annuitant are
different persons. The Participant is not permitted to name a "Co-Annuitant"
under a Qualified Contract. If we pay the death benefit in the form of an
Annuity Option, the Beneficiary becomes the Annuitant.
*ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment
under each Contract is to be made.
*ANNUITY OPTION: The method you choose for making annuity payments.
*ANNUITY UNIT: A unit of measure used in the calculation of the amount of
the second and each subsequent variable annuity payment from the Variable
Account.
APPLICATION: The document signed by you or other evidence acceptable to us
that serves as your application for participation under a Group Contract or
purchase of an Individual Contract. The document signed by the Owner or other
evidence acceptable to us that evidences the Owner's application for a Group
Contract is called a Contract Application.
*BENEFICIARY: Prior to the Annuity Commencement Date, the person or entity
having the right to receive the death benefit and, for Non-Qualified Contracts,
who, in the event of the Participant's death, is the "designated beneficiary"
for purposes of Section 72(s) of the Internal Revenue Code. After the Annuity
Commencement Date, the person or entity having the right to receive any payments
due under the Annuity Option elected, if applicable, upon the death of the
Payee.
BUSINESS DAY: Any day the New York Stock Exchange is open for trading.
CERTIFICATE: The document for each Participant which evidences the
coverage of the Participant under a Group Contract.
COMPANY: Sun Life Assurance Company of Canada (U.S.).
CONTRACT DATE: The date on which we issue your Contract. This is called
the "Date of Coverage" in the Contract.
* As specified on the Contract Specifications page or Certificate Specifications
page, unless changed.
45
<PAGE>
DEATH BENEFIT DATE: If you have elected a death benefit payment option
before your death that remains in effect, the date on which we receive Due Proof
of Death. If your Beneficiary elects the death benefit payment option, the later
of (a) the date on which we receive the Beneficiary's election and (b) the date
on which we receive Due Proof of Death. If we do not receive the Beneficiary's
election within 60 days after we receive Due Proof of Death, the Death Benefit
Date will be the last day of the 60 day period and we will pay the death benefit
in cash.
DUE PROOF OF DEATH: An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof satisfactory to the
Company.
FIXED ACCOUNT: The general account of the Company, consisting of all
assets of the Company other than those allocated to a separate account of the
Company.
FIXED ACCOUNT VALUE: The value of that portion of your Account allocated
to the Fixed Account.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar
amount.
GROUP CONTRACT: A Contract issued by the Company on a group basis.
GUARANTEE AMOUNT: Any portion of your Account Value allocated to a
particular Guarantee Period (including interest earned thereon).
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is
credited.
GUARANTEED INTEREST RATE: The rate of interest we credit on a compound
annual basis during any Guarantee Period.
INCOME PHASE: The period on and after the Annuity Commencement Date and
during the lifetime of the Annuitant during which we make annuity payments under
the Contract.
INDIVIDUAL CONTRACT: A Contract issued by the Company on an individual
basis.
NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement
plan that does not receive favorable federal income tax treatment under Sections
401, 403, 408, or 408A of the Internal Revenue Code. The Participant's interest
in the Contract must be owned by a natural person or agent for a natural person
for the Contract to receive favorable income tax treatment as an annuity.
OWNER: The person, persons or entity entitled to the ownership rights
stated in a Group Contract and in whose name or names the Group Contract is
issued. The Owner may designate a trustee or custodian of a retirement plan
which meets the requirements of Section 401, Section 408(c), Section 408(k),
Section 408(p) or Section 408A of the Internal Revenue Code to serve as legal
owner of assets of a retirement plan, but the term "Owner," as used herein,
shall refer to the organization entering into the Group Contract.
PARTICIPANT: In the case of an Individual Contract, the owner of the
Contract. In the case of a Group Contract, the person named in the Contract who
is entitled to exercise all rights and privileges of ownership under the
Contract, except as reserved by the Owner.
PAYEE: A recipient of payments under a Contract. The term includes an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Participant.
PURCHASE PAYMENT (PAYMENT): An amount paid to the Company as consideration
for the benefits provided by a Contract.
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which may receive favorable federal income tax treatment under Sections 401,
403, 408 or 408A of the Internal Revenue Code of 1986, as amended.
SERIES FUND: MFS/Sun Life Series Trust.
46
<PAGE>
SEVEN-YEAR ANNIVERSARY: The seventh Account Anniversary and each
succeeding Account Anniversary occurring at any seven year interval thereafter;
for example, the 14th, 21st and 28th Account Anniversaries.
SUB-ACCOUNT: That portion of the Variable Account which invests in shares
of a specific series or sub-series of the Series Fund.
VALUATION PERIOD: The period of time from one determination of Variable
Accumulation Unit or Annuity Unit values to the next subsequent determination of
these values. Value determinations are made as of the close of the New York
Stock Exchange on each day that the Exchange is open for trading.
VARIABLE ACCOUNT: Variable Account F of the Company, which is a separate
account of the Company consisting of assets set aside by the Company, the
investment performance of which is kept separate from that of the general assets
of the Company.
VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of
Variable Account Value.
VARIABLE ACCOUNT VALUE: The value of that portion of your Account
allocated to the Variable Account.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount
in relation to the investment performance of the Variable Account.
47
<PAGE>
APPENDIX B
CONDENSED FINANCIAL INFORMATION - ACCUMULATION UNIT VALUES
[to be supplied]
48
<PAGE>
APPENDIX C
WITHDRAWALS, WITHDRAWAL CHARGES AND THE MARKET VALUE ADJUSTMENT
PART 1: VARIABLE ACCOUNT (THE MARKET VALUE ADJUSTMENT DOES NOT APPLY TO THE
VARIABLE ACCOUNT)
WITHDRAWAL CHARGE CALCULATION:
FULL WITHDRAWAL:
Assume a Purchase Payment of $40,000 is made on the Contract Date, no
additional Purchase Payments are made and there are no partial withdrawals. The
table below presents four examples of the withdrawal charge resulting from a
full withdrawal of your Account, based on hypothetical Account Values.
<TABLE>
<CAPTION>
HYPOTHETICAL FREE NEW WITHDRAWAL WITHDRAWAL
ACCOUNT ACCOUNT WITHDRAWAL PAYMENTS CHARGE CHARGE
YEAR VALUE AMOUNT WITHDRAWN PERCENTAGE AMOUNT
--------------- ------------ ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(a) 1 $ 41,000 $ 4,000 $ 37,000 6.00% $ 2,220
(b) 3 $ 52,000 $ 12,000 $ 40,000 5.00% $ 2,000
(c) 7 $ 80,000 $ 28,000 $ 40,000 3.00% $ 1,200
(d) 9 $ 98,000 $ 68,000 0 0.00% 0
</TABLE>
(a) The free withdrawal amount in any Account Year is equal to (1) the Annual
Withdrawal Allowance for that year (i.e., 10% of all Purchase Payments made
in the last seven Account Years ("New Payments")); plus (2) any unused
Annual Withdrawal Allowances from previous years; plus (3) any Purchase
Payments made before the last seven Account Years ("Old Payments") not
previously withdrawn. In Account Year 1, the free withdrawal amount is
$4,000 (the Annual Withdrawal Allowance for that year) because there are no
unused Annual Withdrawal Allowances from previous years and no Old Payments.
The $41,000 full withdrawal is attributed first to the $4,000 free
withdrawal amount. The remaining $37,000 is withdrawn from the Purchase
Payment made in Account Year 1 and is subject to the withdrawal charge.
(b) In Account Year 3, the free withdrawal amount is $12,000 (the $4,000 Annual
Withdrawal Allowance for the current year plus the unused $4,000 Annual
Withdrawal Allowances for each of Account Years 1 and 2). The $52,000 full
withdrawal is attributed first to the free withdrawal amount and the
remaining $40,000 is withdrawn from the Purchase Payment made in Account
Year 1.
(c) In Account Year 7, the free withdrawal amount is $28,000 (the $4,000 Annual
Withdrawal Allowance for the current Account Year plus the unused Annual
Withdrawal Allowance of $4,000 for each of Account Years 1 through 6). The
$80,000 full withdrawal is attributed first to the free withdrawal amount.
The next $40,000 is withdrawn from the Purchase Payment made in Account Year
1 and is subject to the withdrawal charge. The remaining $12,000 exceeds the
total of the free withdrawal amount plus all New Payments not previously
withdrawn, so it is not subject to the withdrawal charge.
(d) In Account Year 9, the free withdrawal amount is $68,000, calculated as
follows. There are no Annual Withdrawal Allowances for Account Years 8 or 9
because there are no New Payments in those years. The $40,000 Purchase
Payment made in Account Year 1 is now an Old Payment that constitutes a
portion of the free withdrawal amount. In addition, the unused Annual
Withdrawal Allowances of $4,000 for each of Account Years 1 through 7 are
carried forward and available for use in Account Year 9. The $98,000 full
withdrawal is attributed first to the free withdrawal amount. Because the
remaining $30,000 is not withdrawn from New Payments, this part of the
withdrawal also will not be subject to the withdrawal charge.
PARTIAL WITHDRAWAL:
Assume a single Purchase Payment of $40,000 is made on the Contract Date,
no additional Purchase Payments are made, no partial withdrawals have been taken
prior to the fifth Account Year,
49
<PAGE>
and there are a series of three partial withdrawals made during the fifth
Account Year of $9,000, $12,000, and $15,000.
<TABLE>
<CAPTION>
HYPOTHETICAL PARTIAL FREE NEW WITHDRAWAL WITHDRAWAL
ACCOUNT WITHDRAWAL WITHDRAWAL PAYMENTS CHARGE CHARGE
VALUE AMOUNT AMOUNT WITHDRAWN PERCENTAGE AMOUNT
------------ ----------- ----------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(a) $ 64,000 $ 9,000 $ 20,000 $ 0 4.00% $ 0
(b) $ 56,000 $ 12,000 $ 11,000 $ 1,000 4.00% $ 40
(c) $ 40,000 $ 15,000 $ 0 $ 15,000 4.00% $ 600
</TABLE>
(a) In the fifth Account Year, the free withdrawal amount is equal to $20,000
(the $4,000 Annual Withdrawal Allowance for the current year, plus the
unused $4,000 for each of the Account Years 1 through 4). The partial
withdrawal amount ($9,000) is less than the free withdrawal amount so no New
Payments are withdrawn and no withdrawal charge applies.
(b) Since a partial withdrawal of $9,000 was taken, the remaining free
withdrawal amount is equal to $11,000. The $12,000 partial withdrawal will
first be applied against the $11,000 free withdrawal amount. The remaining
$1,000 will be withdrawn from the $40,000 New Payment, incurring a
withdrawal charge of $40.
(c) The free withdrawal amount is zero since the previous partial withdrawals
have already used the free withdrawal amount. The entire partial withdrawal
amount will result in New Payments being withdrawn and will incur a
withdrawal charge.
PART 2 -- FIXED ACCOUNT -- EXAMPLES OF THE MARKET VALUE ADJUSTMENT ("MVA")
The MVA Factor is:
<TABLE>
<C> <C>
N/12
1 + I
( -------- ) -1
1 + J + b
</TABLE>
These examples assume the following:
1) the Guarantee Amount was allocated to a five year Guarantee Period
with a Guaranteed Interest Rate of 6% or .06.
2) the date of surrender is two years from the Expiration Date (N =
24).
3) the value of the Guarantee Amount on the date of surrender is
$11,910.16.
4) the interest earned in the current Account Year is $674.16.
5) no transfers or partial withdrawals affecting this Guarantee Amount
have been made.
6) withdrawal charges, if any, are calculated in the same manner as
shown in the examples in Part 1.
EXAMPLE OF A NEGATIVE MVA:
Assume that on the date of surrender, the current rate (J) is 8% or .08
and the b factor is zero.
<TABLE>
<C> <S> <C> <C>
N/12
1 + I
The MVA factor = ( -------- ) -1
1 + J + b
</TABLE>
<TABLE>
<C> <S> <C> <C>
24/12
1 + .06
= ( ------ ) -1
1 + .08
2
= (.981) -1
= .963 -1
= - .037
</TABLE>
50
<PAGE>
The value of the Guarantee Amount less interest credited to the Guarantee
Amount in the current Account Year is multiplied by the MVA factor to determine
the MVA
($11,910.16 - $674.16) X (-.037) = -$415.73
-$415.73 represents the MVA that will be deducted from the value of the
Guarantee Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA
would be ($2,000.00 - $674.16) X (-.037) = -$49.06. -$49.06 represents the MVA
that will be deducted from the partial withdrawal amount before the deduction of
any withdrawal charge.
EXAMPLE OF A POSITIVE MVA:
Assume that on the date of surrender, the current rate (J) is 5% or .05
and the b factor is zero.
<TABLE>
<C> <S> <C> <C>
N/12
1 + I
The MVA factor = ( -------- ) -1
1 + J + b
</TABLE>
<TABLE>
<C> <S> <C> <C>
24/12
1 + .06
= ( ------ ) -1
1 + .05
2
= (1.010) -1
= 1.019 -1
= - .019
</TABLE>
The value of the Guarantee Amount less interested credit to the Guarantee
Amount in the current Account Year is multiplied by the MVA factor to determine
the MVA
($11,910.16 - $674.16) X .019 = $213.48
$213.48 represents the MVA that would be added to the value of the
Guarantee Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA
would be ($2,000.00 - $674.16) X .019 = $25.19.
$25.19 represents the MVA that would be added to the value of the partial
withdrawal amount before the deduction of any withdrawal charge.
51
<PAGE>
<TABLE>
<S> <C>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TELEPHONE:
Toll Free (800) 752-7215
In Massachusetts (617) 348-9600
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
AUDITORS
Deloitte Touche LLP
125 Summer Street
Boston, Massachusetts 02110
</TABLE>
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Attached hereto and made a part hereof is the Statement of Additional
Information dated May 1, 1999 for each of the following:
MFS Regatta Platinum
MFS Regatta Gold (to be provided by amendement)
Futurity II (to be provided by amendment)
<PAGE>
May 1, 1999
MFS REGATTA PLATINUM
VARIABLE AND FIXED ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
TABLE OF CONTENTS
Calculation of Performance Data - Average Annual Total Return...................
Non-Standardized Investment Performance ........................................
Advertising and Sales Literature ...............................................
Calculations ...................................................................
Example of Variable Accumulation Unit Value Calculation....................
Example of Variable Annuity Unit Calculation ..............................
Example of Variable Annuity Payment Calculation ...........................
Calculation of Annuity Values .............................................
Distribution of the Contracts ..................................................
Designation and Change of Beneficiary ..........................................
Custodian ......................................................................
Financial Statements ...........................................................
The Statement of Additional Information sets forth information which
may be of interest to prospective purchasers of MFS Regatta Platinum Variable
and Fixed Annuity Contracts (the "Contracts") issued by Sun Life Assurance
Company of Canada (U.S.) (the "Company") in connection with Sun Life of Canada
(U.S.) Variable Account F (the "Variable Account") which is not included in the
Prospectus dated May 1, 1999. This Statement of Additional Information should
be read in conjunction with the Prospectus, a copy of which may be obtained
without charge from the Company at its Annuity Service Mailing Address, c/o Sun
Life Assurance Company of Canada (U.S.), Retirement Products and Services, P.O.
Box 1024, Boston, Massachusetts 02103, or by telephoning (617) 348-9600 or
(800)-752-7215.
The terms used in this Statement of Additional Information have the
same meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
-2-
CALCULATION OF PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable
Account, the Average Annual Total Return for the stated periods (or shorter
period indicated in the note below), based upon a hypothetical initial Purchase
Payment of $1,000, calculated in accordance with the formula set out after the
table. No information is shown for the Series that have not commenced operations
or that have been in operation for less than one year.
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1998
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR DATE OF INCEPTION
PERIOD PERIOD PERIOD LIFE *
<S> <C> <C> <C> <C> <C>
Capital Appreciation
Capital Opportunities Series
Conservative Growth Series
Emerging Growth Series
Government Securities Series
High Yield Series
International Growth Series
International Growth and Income
Series
Managed Sectors Series
MFS/Foreign & Colonial Emerging
Markets Equity Series**
Money Market Series
Research Series
Research Growth and Income
Series
Total Return Series
Utilities Series
World Asset Allocation Series
World Governments Series
World Growth Series
World Total Return Series
</TABLE>
*From commencement of investment operations
The length of the period and the last day of each period used in the
above table are set out in the table heading and in the footnotes above. The
Average Annual Total Return for each period was determined by finding the
average annual compounded rate of return over each period that would equate the
initial amount invested to the ending redeemable value for that period, in
accordance with the following formula:
<PAGE>
-3-
n
P(l + T) = ERV
Where: P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return for the period
n = number of years
ERV = redeemable value (as of the end of the period) of a
hypothetical $1,000 Purchase Payment made at the beginning of the 1-year,
5-year, or 10-year period (or fractional portion thereof)
The formula assumes that: 1) all recurring fees have been deducted from the
Participant's Account; 2) all applicable non-recurring Contract charges are
deducted at the end of the period, and 3) there will be a full surrender at the
end of the period.
The $35 annual Account Fee will be allocated among the Sub-Accounts so
that each Sub-Account's allocated portion of the Account Fee is proportional to
the percentage of the number of Individual Contracts and Certificates that have
amounts allocated to that Sub-Account. Because the impact of Account Fees on a
particular Contract may differ from those assumed in the computation due to
differences between actual allocations and the assumed ones, the total return
that would have been experienced by an actual Contract over these same time
periods may have been different from that shown above.
NON-STANDARDIZED INVESTMENT PERFORMANCE:
The Variable Account may illustrate its results over various periods
and compare its results to indices and other variable annuities in sales
materials including advertisements, brochures and sports. Such results may be
computed on a "cumulative" and/or "annualized" basis.
"Cumulative" quotations are arrived at by calculating the change in
the Accumulation Unit value of a Sub-Account between the first and last day of
the base period being measured, and expressing the difference as a percentage of
the Accumulation Unit value at the beginning of the base period.
"Annualized" quotations (described in the following table as
"Compound Growth Rate") are calculated by applying a formula which determines
the level rate of return which, if earned over the entire base period, would
produce the cumulative return.
[CHARTS to be filed by amendments]
<PAGE>
-4-
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, the Company may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors
affecting the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
DUFF & PHELPS CREDIT RATING Company's Insurance Company Claims Paying
Ability Rating is an independent evaluation by a nationally accredited rating
organization of an insurance company's ability to meet its future obligations
under the contracts and products it sells. The rating takes into account both
quantitative and qualitative factors.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a
publisher of statistical data covering the investment company industry in the
United States and overseas. Lipper is recognized as the leading source of data
on open-end and closed-end funds. Lipper currently tracks the performance of
over 5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
STANDARD & POOR's insurance claims-paying ability rating is an opinion
of an operating insurance company's financial capacity to meet obligations of
its insurance policies in accordance with their terms.
VARDS (Variable Annuity Research Data Service) provides a
comprehensive guide to variable annuity contract features and historical fund
performance. The service also provides a readily understandable analysis of the
comparative characteristics and market performance of funds inclusive in
variable contracts.
MOODY'S Investors Services, Inc.'s insurance claims-paying rating is a
system of rating an insurance company's financial strength, market leadership,
and ability to meet financial obligations. The purpose of Moody's ratings is to
provide investors with a simple system of gradation by which the relative
quality of insurance companies may be noted.
STANDARD & POOR'S INDEX - broad-based measurement of changes in
stock-market conditions based on the average performance of 500 widely held
common stocks; commonly known as the Standard & Poor's 500 (S&P 500). The
selection of stocks, their relative weightings to reflect differences in the
number of outstanding shares, and publication of the index itself are services
of Standard & Poor's Corporation, a financial advisory, securities rating, and
publishing firm. The index tracks 400 industrial company stocks, 20
transportation stocks, 40 financial company stocks, and 40 public utilities.
<PAGE>
-5-
NASDAQ-OTC Price Index - this index is based on the National
Association of Securities Dealers Automated Quotations (NASDAQ) and represents
all domestic over-the-counter stocks except those traded on exchanges and those
having only one market maker, a total of some 3,500 stocks. It is market
valueweighted and was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA) - rice-weighted average of 30
actively traded blue chip stocks, primarily industrials, but including American
Express Company and American Telephone and Telegraph Company. Prepared and
Published by Dow Jones & Company, it is the oldest and most widely quoted of all
the market indicators. The average is quoted in points, not dollars.
MORNINGSTAR, Inc. is an independent financial publisher offering
comprehensive statistical and analytical coverage of open-end and closed-end
funds and variable annuities. This coverage for mutual funds includes, among
other information, performance analysis rankings, risk rankings (e.g.
aggressive, moderate or conservative), and "style box" matrices. Style box
matrices display, for equity funds, the investment philosophy and size of the
companies in which the fund invests and, for fixed-income funds, interest rate
sensitivity and credit quality of the investment instruments.
IBBOTSON ASSOCIATES, Inc. is a consulting firm that provides a variety
of historical data, including total return, capital appreciation and income, on
the stock market as well as other investment asset classes, and inflation. This
information will be used primarily for comparative purposes and to illustrate
general financial planning principles.
In its advertisements and other sales literature for the Variable
Acc6unt and the Series Fund, the Company intends to illustrate the advantages of
the Contracts in a number of ways:
DOLLAR COST AVERAGING ILLUSTRATIONS. These illustrations will
generally discuss the price-leveling effect of making regular investments in the
same Sub-Accounts over a period of time, to take advantage of the trends in
market prices of the portfolio securities purchased by those Sub-Accounts.
SYSTEMATIC WITHDRAWAL PROGRAM. A service provided by the Company,
through which a Participant may take any distribution allowed by Code Section
401 (a) (9) in the case of Qualified Contracts, or permitted under Code Section
72 in the case of Non-Qualified Contracts, by way of a series of partial
withdrawals. Withdrawals under this program may be fully or partially includible
in income and may be subject to a 10% penalty tax. Consult your tax advisor.
THE COMPANY'S OR MFS' CUSTOMERS. Sales literature for the Variable
Account and the Funds may refer to the number of clients which they serve.
THE COMPANY'S OR MFS' ASSETS, SIZE. The Company may discuss its
general financial condition (see, for example, the references to Standard &
Poor's, Duff & Phelps and A.M. Best Company above); it may refer to its assets;
it may also discuss its
<PAGE>
-6-
relative size and/or ranking among companies in the industry or among any
sub-classification of those companies, based upon recognized evaluation
criteria. For example, at year-end 1996 the Company was the 38th largest U.S.
life insurance company based upon overall assets and its parent company, Sun
Life Assurance Company of Canada, was the 19th largest.
COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several
advantages of the variable annuity contract. For example, but not by way of
limitation, the literature may emphasize the potential savings through tax
deferral; the potential advantage of the Variable Account over the Fixed
Account; and the compounding effect when a participant makes regular deposits to
his or her account.
The Company may use hypothetical illustrations of the benefits of tax
deferral, including but not limited to the following chart:
The chart below assumes an initial investment of $10,000 which remains
fully invested for the entire time period, an 8% annual return, and a 33%
combined federal and state income tax rate. It compares how three different
investments might fare over 10, 20, and 30 years. The first example illustrates
an investment in a non-tax-deferred account and assumes that taxes are paid
annually out of that account. The second example illustrates how the same
investment would grow in a tax-deferred investment, such as an annuity. And the
third example illustrates the net value of the tax-deferred investment after
paying taxes on the full account value.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
10 YEARS 20 YEARS 30 YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Tax-Deferred Account $16,856 $28,413 $ 47,893
- --------------------------------------------------------------------------------
Tax-Deferred Account $21,589 $46,610 $100,627
- --------------------------------------------------------------------------------
Tax-Deferred Account After $17,765 $34,528 $ 70,720
- --------------------------------------------------------------------------------
Paying Taxes
- --------------------------------------------------------------------------------
</TABLE>
THIS ILLUSTRATION IS HYPOTHETICAL AND DOES NOT REPRESENT THE PROJECTED
PERFORMANCE OF THE MFS REGATTA PLATINUM VARIABLE ANNUITY OR ANY OF ITS
INVESTMENT OPTIONS. THE ILLUSTRATION DOES NOT REFLECT THE DEDUCTION OF ANY
CHARGES OR FEES RELATED TO PORTFOLIO MANAGEMENT, MORTALITY AND EXPENSE, OR
ACCOUNT ADMINISTRATION. TAXES ON EARNINGS WITHIN AN ANNUITY ARE DUE UPON
WITHDRAWAL. WITHDRAWALS MAY ALSO BE SUBJECT TO SURRENDER CHARGES AND, IF MADE
PRIOR TO AGE 59 1/2, A 10% FEDERAL PENALTY TAX.
<PAGE>
-7-
CALCULATIONS
EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATION
Suppose the net asset value of a Series Fund share at the end of the
current valuation period is $18.38; at the end of the immediately preceding
valuation period was $18.32; the Valuation Period is one day; and no
dividends or distributions caused Series Fund shares to go "ex-dividend"
during the current Valuation Period. $18.38 divided by $18.32 is 1.00327511.
Subtracting the one day risk factor for mortality and expense risks and the
administrative expense charge of .00003863 (the daily equivalent of the
current maximum charge of 1.40% on an annual basis) gives a net investment
factor of 1.00323648. If the value of the variable accumulation unit for the
immediately preceding valuation period had been 14.5645672, the value for the
current valuation period would be 14.6117051 (14.5645672 X 1.00323648).
EXAMPLE OF VARIABLE ANNUITY UNIT CALCULATION
Suppose the circumstances of the first example exist, and the value of
an annuity unit for the immediately preceding valuation period had been
12.3456789. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 3% per year, the value
of the annuity unit for the current valuation period would be 12.3846325
(12.3456789 X 1.00323648 (the Net Investment Factor) X 0.99991902).
0.99991902 is the factor, for a one day Valuation Period, that neutralizes
the assumed interest rate of 3% per year used to establish the Annuity
Payment Rates found in certain Contracts. (The factor that neutralizes the
assumed interest rate of 3% per year used to establish the Annuity Payment
Rates found in other Contracts is 0.99991902).
EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATION
Suppose that a Participant Account is credited with 8,765.4321 variable
accumulation units of a particular Sub-Account but is not credited with
any fixed accumulation units; that the variable accumulation unit value and
the annuity unit value for the particular Sub-Account for the valuation
period which ends immediately preceding the annuity commencement date are
14.5645672 and 12.3456789 respectively; that the annuity payment rate for the
age and option elected is $6.78 per $1,000; and that the annuity unit value
on the day prior to the second variable annuity payment date is 12.3846325.
The first variable annuity payment would be $865.57 (8,765.4321 X 14.5845672
X 6.78 divided by 1,000). The number of annuity units credited would be
70.1112 ($865.57 divided by 12.3456789) and the second variable annuity
payment would be $868.28 (70.1112 X 12.3846325).
CALCULATION OF ANNUITY VALUES
The Fixed Annuity Unit Value for each Sub-Account is $10.00 for the
first Valuation Period of the Sub-Account. For subsequent Valuation periods,
the Variable Annuity Unit Value for the Sub-Account is the previous Variable
Annuity Unit Value times the Net Investment Factor for the Sub-Account.
DISTRIBUTION OF THE CONTRACTS
We offer the Contracts on a continuous basis. The Contracts are sold
by licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. and who have entered into
distribution agreements with the Company and the general distributor and
principal underwriter of the Contracts, Clarendon Insurance Agency, Inc.
("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02181. Clarendon is a wholly-owned subsidiary of the Company. Clarendon is
registered with the Commission under the Securities Exchange Act of 1934 as
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. Clarendon also acts as the general distributor of certain other annuity
contracts issued by the Company and its wholly-owned subsidiary, Sun Life
Insurance and Annuity Company of New York, and variable life insurance contracts
issued by the Company.
Commissions and other distribution compensation will be paid by the
Company to the selling agents and will not be more than 7.34% of Purchase
Payments. In addition, after the first Account Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 1.00% of the Participant's Account Value. In
addition to commissions, the Company may, from time to time, pay or allow
additional promotional incentives, in the form of cash or other compensation. In
some instances, such other incentives may be offered only to certain
<PAGE>
-8-
broker-dealers that sell or are expected to sell during specified time periods
certain minimum amounts of the Contracts or Certificates or other contracts
offered by the Company. Commissions will not be paid with respect to
Participant Accounts established for the personal account of employees of the
Company or any of its affiliates, or of persons engaged in the distribution of
the Contracts, or of immediate family members of such employees or persons. In
addition, commissions may be waived or reduced in connection with certain
transactions described in the Prospectus under "Waivers; Reduced Charges;
Credits; Bonus Guaranteed Interest Rates."
DESIGNATION AND CHANGE OF BENEFICIARY
The beneficiary designation in the Application will remain in effect
until changed.
Subject to the rights of an irrevocably designated Beneficiary, you
may change or revoke the designation of Beneficiary by filing the change or
revocation with us in the form we require. The change or revocation will not be
binding on us until we receive it. When we receive it, the change or revocation
will be effective as of the date on which it was signed, but the change or
revocation will be without prejudice to us on account of any payment we make or
any action we take before receiving the change or revocation.
Please refer to the terms of your particular retirement plan and any
applicable legislation for any restrictions on the beneficiary designation.
CUSTODIAN
We are the Custodian of the assets of the Variable Account. We will
purchase Series Fund shares at net asset value in connection with amounts
allocated to the Sub-Accounts in accordance with your instructions and redeem
Series Fund shares at net asset value for the purpose of meeting the contractual
obligations of the Variable Account, paying charges relative to the Variable
Account or making adjustments for annuity reserves held in the Variable Account.
FINANCIAL STATEMENTS
The Financial Statements of Sun Life of Canada (U.S.) for the year
ended December 31, 1998 included in this Statement of Additional Information
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein, and are included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
[FINANCIAL STATEMENTS OF VARIABLE ACCOUNT F]
<PAGE>
-9-
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
TELEPHONE:
Toll Free (800) 752-7215
In Massachusetts (617) 348-9600
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
AUDITORS
Deloitte Touche LLP
125 Summer Street
Boston, Massachusetts 02110
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in the
Registration Statement:
Included in Part A:
A. Condensed Financial Information - Accumulation Unit Values.
(To be provided by amendment)
B. Financial Statements of the Registrant (To be provided by
amendment):
1. Statement of Condition, December 31, 1998;
2. Statement of Operations, Year Ended December 31,
1998;
3. Statements of Changes in Net Assets, Years Ended
December 31, 1998 and December 31, 1997;
4. Notes to Financial Statements; and
5. Independent Auditors' Report.
C. Financial Statements of the Depositor (To be provided by
amendment):
1. Statutory Statements of Admitted Assets,
Liabilities and Capital Stock and Surplus,
December 31, 1998 and 1997;
2. Statutory Statements of Operations, Years Ended
December 31, 1998, 1997 and 1996;
3. Statutory Statements of Changes in Capital Stock
and Surplus, Years Ended December 31, 1998, 1997
and 1996;
4. Statutory Statements of Cash Flow, Years Ended
December 31, 1998, 1997 and 1996;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
(b) The following Exhibits are incorporated in the Registration
Statement by reference unless otherwise indicated:
(1) Resolution of Board of Directors of the depositor
dated December 3, 1985 authorizing the
establishment of the Registrant (Incorporated
herein by reference to Exhibit 1 to the
Registration Statement of the Registrant on Form
N-4, File No. 333-37907, filed on October 14,
1997);
(2) Not Applicable;
(3)(a) Distribution Agreement between the depositor,
Massachusetts Financial Services Company and
Clarendon Insurance Agency, Inc. (Incorporated
herein by reference to Exhibit 3(a) to
Pre-Effective Amendment No. 1 to the Registration
Statement of the Registrant on Form N-4, File No.
333-37907, filed on January 16, 1998);
(b)(i) Specimen Sales Operations and General Agent
Agreement (Incorporated herein by reference to
Exhibit 3(b)(i) to Pre-Effective Amendment No. 1
to the Registration Statement of the Registrant on
Form N-4, File No. 333-37907, filed on January 16,
1998);
<PAGE>
(b)(ii) Specimen Broker-Dealer Supervisory and Service
Agreement (Incorporated herein by reference to
Exhibit 3(b)(ii) to Pre-Effective Amendment No. 1
to the Registration Statement of the Registrant on
Form N-4, File No. 333-37907, filed on January 16,
1998); and
(b)(iii) Specimen Registered Representatives Agent
Agreement (Incorporated herein by reference to
Exhibit 3(b)(iii) to Pre-Effective Amendment No.
1 to the Registration Statement of the Registrant
on Form N-4, File No. 333-37907, filed on January
16, 1998);
(4)(a)(i) Form of Flexible Payment Combination
Fixed/Variable Group Annuity Contract (MFS Regatta
Gold) (Filed as Exhibit 4(a) to Post-Effective
Amendment No. 5 to the Registration Statement of
the Registrant on Form N-4, File No. 33-41628);
(a)(ii) Form of Flexible Payment Combination
Fixed/Variable Group Annuity Contract (MFS
Regatta Platinum (Incorporated by reference to
Exhibit 4(a) to Post-Effective Amendment No. 9 to
the Registration Statement of the Registrant on
Form N-4, File No. 33-41628, filed on March 2,
1998);
(b)(i) Form of Certificate to be issued in connection
with Contract filed as Exhibit 4(a)(i) (Filed as
Exhibit 4(b) to Post-Effective Amendment No. 5 to
the Registration Statement of the Registrant on
Form N-4, File No 33-41628;
(b)(ii) Form of Certificate (MFS Regatta Platinum) to be
issued in connection with Contract filed as
Exhibit 4(a)(ii) (Incorporated by reference to
Exhibit 4(b) to Post-Effective Amendment No. 9 to
the Registration Statement of the Registrant on
Form N-4, File No. 33-41628, filed on March 2,
1998);
(5)(a)(i) Form of Application to be used with the annuity
contract filed as Exhibit 4(a)(i) (Filed as
Exhibit 5(a) to Post-Effective Amendment No. 7 to
the Registration Statement of the Registrant on
Form N-4, File No. 33-41628;
(a)(ii) Form of Application to be used with the annuity
contract filed as Exhibit 4(a) (Incorporated
herein by reference to Exhibit 5(a) to
Post-Effective Amendment No. 9 to the Registration
Statement of the Registrant on Form N-4, File No.
33-41628, filed on March 2, 1998);
(b)(i) Form of Application to be used with the
Certificate filed as Exhibit 4(b)(i) (Filed as
Exhibit 5 (b) to Post-Effective Amendment No. 7
to the Registration Statement of the Registrant on
Form N-4, File No. 33-41628);
(b)(ii) Form of Application to be used with the
Certificate filed as Exhibit 4(b) (Incorporated
herein by reference to Exhibit 5(b) to
Post-Effective Amendment No. 9 to the Registration
Statement of the Registrant on Form N-4, File
33-41628, filed on March 2, 1998);
(6) Certificate of Incorporation and By-laws of the
depositor (Incorporated herein by reference to
Exhibits 3(a) and 3(b), respectively, to the
Registration Statement of the Depositor on Form
S-1, File No. 333-37907, filed on October 14,
1997);
(7) Not Applicable;
(8) None;
(9) Opinion of Counsel and Consent to its use as to
the legality of the securities being registered
(Previously filed).
(10) Consent of Deloitte & Touche, LLP (To be filed by
amendment);
(11) Financial Statement Schedules I and VI (To be
filed by amendment);
(12) Not Applicable;
(13) Schedule for Computation of Performance Quotations
(To be filed by amendment);
(14) Not Applicable; and
(15) Powers of Attorney (Previously filed)
<PAGE>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------
Donald A. Stewart Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
John D. McNeil Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn Director
Strong Road
New Vineyard, ME 04956
John S. Lane Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Richard B. Bailey Director
63 Atlantic Avenue
Boston, MA 02116
M. Colyer Crum Director
104 Westcliff Street
Weston, MA 02193
Angus A. MacNaughton Director
Metro Tower, Suite 1170
950 Tower Lane
Foster City, CA 94404
C. James Prieur President and Director
One Sun Life Executive Park
Wellesley Hills, MA 02481
S. Caesar Raboy Senior Vice President, Deputy
One Sun Life Executive Park General Manager and Director
Wellesley Hills, MA 02481
<PAGE>
Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------
L. Brock Thomson Vice President and Treasurer
One Sun Life Executive Park
Wellesley Hills, MA 02481
Robert P. Vrolyk Vice President and Actuary
One Sun Life Executive Park
Wellesley Hills, MA 02481
James M.A. Anderson Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA 02481
Peter F. DeMuth Vice President, Chief Counsel
One Sun Life Executive Park and Assistant Secretary
Wellesley Hills, MA 02481
Ellen B. King Secretary
One Sun Life Executive Park
Wellesley Hills, MA 02481
Cheryl L. Lamie Assistant Secretary
One Sun Life Executive Park
Wellesley Hills, MA 02481
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
No person is directly or indirectly controlled by the Registrant. The
Registrant is a separate account of Sun Life Assurance Company of Canada
(U.S.), a wholly-owned subsidiary of Sun Life of Canada (U.S.) Holdings,
Inc., a wholly-owned subsidiary of Sun Life Assurance Company of Canada -
U.S. Operations Holdings, Inc., which is in turn a wholly-owned subsidiary of
Sun Life Assurance Company of Canada.
The following is a list of all corporations directly or indirectly controlled
by or under common control with Sun Life Assurance Company of Canada, showing
the state or other sovereign power under the laws of which each is organized
and the percentage ownership of voting securities giving rise to the control
relationship:
<PAGE>
<TABLE>
<CAPTION>
Percent of
State or Country Ownership
or Jurisdiction of Voting
of Incorporation Securities
---------------- ----------
<S> <C> <C>
Sun Life Assurance Company of Canada Canada
- ------------------------------------------------------------------------------------------
Sun Life Assurance Company of Canada -
U.S. Operations Holdings, Inc............. Delaware 100%
Sun Life Assurance Company of Canada
(U.K.) Limited ........................... United Kingdom 100%
Sun Life of Canada Investment Management
Limited .................................. Canada 100%
Sun Life of Canada Benefit Management
Limited .................................. Canada 100%
Spectrum United Holdings, Inc............. Canada 100%
Sun Canada Financial Co................... Delaware 100%
Sun Life of Canada (U.S.) Holdings, Inc. Delaware 0%*
Sun Life of Canada (U.S.) Financial Services
Holdings, Inc......................... Delaware 0%*
Sun Life Assurance Company of Canada (U.S.) Delaware 0%**
Sun Life Insurance and Annuity Company of
New York ............................. New York 0%****
Sun Life of Canada (U.S.) Distributors, Inc.... Delaware 0%****
Sun Benefit Services Company, Inc. ......... Delaware 0%****
Sun Life of Canada (U.S.) SPE 97-1, Inc..... Delaware 0%****
Massachusetts Financial Services Company ... Delaware 0%***
New London Trust, F.S.B..................... Federally Chartered 0%****
Clarendon Insurance Agency, Inc. ........... Massachusetts 0%****
MFS Service Center, Inc..................... Delaware 0%*****
MFS/Sun Life Series Trust .................. Massachusetts 0%******
Sun Capital Advisers, Inc. ................. Delaware 0%****
MFS International, Ltd. .................... Ireland 0%*****
MFS Institutional Advisors, Inc. ........... Delaware 0%*****
MFS Fund Distributors, Inc. ................ Delaware 0%*****
MFS Retirement Services, Inc. .............. Delaware 0%*****
Sun Life Financial Services Limited......... Bermuda 0%****
</TABLE>
____________
* 100% of the issued and outstanding voting securities of Sun Life Of
Canada (U.S.) Holdings, Inc. and Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. is owned by Sun Life Assurance Company of
Canada - U.S. Operations Holdings, Inc.
** 100% of the issued and outstanding voting securities of Sun Life
Assurance Company of Canada (U.S.) is owned by Sun Life of Canada
(U.S.) Holdings, Inc.
*** 93.6% of the issued and outstanding voting securities of Massachusetts
Financial Services Company is owned by Sun Life of Canada (U.S.)
Financial Services Holdings, Inc.
**** 100% of the issued and outstanding voting securities of New London
Trust, F.S.B., Sun Life Insurance and Annuity Company of New York, Sun
Life of Canada (U.S.) Distributors, Inc., Sun Benefit Services
Company, Inc., Sun Capital Advisers, Inc., Sun Life Financial Services
Limited, Sun Life of Canada (U.S.) SPE 97-1, Inc., and Clarendon
Insurance Agency, Inc. is owned by Sun Life Assurance Company of
Canada (U.S.).
***** 100% of the issued and outstanding voting securities of MFS Service
Center, Inc., MFS International, Ltd., MFS Institutional Advisors,
Inc., MFS Fund Distributors, Inc., and MFS Retirement Services, Inc.
is owned by Massachusetts Financial Services Company.
****** 100% of the issued and outstanding voting securities of MFS/Sun Life
Series Trust is owned by separate accounts of Sun Life Assurance
Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of
New York.
<PAGE>
Omitted from the list are subsidiaries of Sun Life Assurance Company of
Canada which, considered in the aggregate, would not constitute a "significant
subsidiary" (as that term is defined in Rule 8b-2 under Section 8 of the
Investment Company Act of 1940) of Sun Life Assurance Company of Canada. None
of the companies listed is a subsidiary of the Registrant; therefore, the only
financial statements being filed are those of Sun Life Assurance
Company of Canada (U.S.).
Item 27. NUMBER OF CONTRACT OWNERS:
As of December 31, 1998 there were 51,964 qualified and 103,680
non-qualified Contracts issued by the Registrant.
Item 28. INDEMNIFICATION
Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of
the By-laws of Sun Life Assurance Company of Canada (U.S.), a copy of which
was filed as Exhibit 3(b) to the Registration Statement of the Depositor on
Form S-1, File No. 33-29851, provides for the indemnification of directors,
officers and employees of Sun Life Assurance Company of Canada (U.S.).
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of Sun Life Assurance Company of Canada (U.S.) pursuant to the certificate of
incorporation, by-laws, or otherwise, Sun Life (U.S.) has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Sun Life (U.S.) of expenses incurred
or paid by a director, officer, controlling person of Sun Life (U.S.) in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, Sun Life (U.S.) will submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against
public policy as expressed in the Act, unless in the opinion of their counsel
the matter has been settled by controlling precedent, and will be governed by
the final adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., a wholly-owned subsidiary of the
Registrant, acts as general distributor for the Registrant, Sun Life of
Canada (U.S.) Variable Accounts C, D, and E, Sun Life (N.Y.) Variable
Accounts A, B and C and Money Market Variable Account, High Yield Variable
Account, Capital Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account, Total Return Variable
Account and Managed Sectors Variable Account.
Name and Principal Positions and Offices
Business Address* with Underwriter
---------------- ----------------
Jane Mancini....................... President and Director
Robert P. Vrolyk................... Director
James M.A. Anderson................ Director
Donald E. Kaufman.................. Vice President
S. Caesar Raboy.................... Director
C. James Prieur.................... Director
L. Brock Thompson.................. Vice President and Treasurer
Roy P. Creedon..................... Secretary
Cindy Orcutt....................... Vice President
Laurie Lennox...................... Vice President
Maura A. Murphy.................... Assistant Secretary
Peter Marion....................... Tax Officer
____________
* The principal business address of all directors and officers of the
principal underwriter except Ms. Mancini and Ms. Lennox is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481. The principal business
address of Ms. Mancini and Ms. Lennox is One Copley Place, Boston, Massachusetts
02116.
(a) Inapplicable.
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained, in whole or in part, by Sun Life Assurance Company
of Canada (U.S.) at its executive office at One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481, at the offices of the Sun Life Annuity
Service Center at One Copley Place, Boston, Massachusetts 02116 or at the
offices of Clarendon Insurance Agency, Inc., at One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481.
Item 31. MANAGEMENT SERVICES
Not Applicable.
Item 32. UNDERTAKINGS
Representation with respect to Section 26(e)of the Investment Company
Act of 1940: Sun Life Assurance Company of Canada (U.S.) represents that the
fees and charges deducted under the Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance company.
The registrant is relying on the no-action letter issued by the Division
of Investment Management of the Securities and Exchange Commission to
American Council of Life Insurance, Ref. No. IP-6-88, dated November 28,
1988, the requirements for which have been complied with by the Registrant.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant has caused this Post-Effective Amendment No. 11 to its
Registration Statement to be signed on its behalf in the City of Boston and
Commonwealth of Massachusetts on the 11th day of January, 1999.
<TABLE>
<S> <C> <C>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
(REGISTRANT)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(DEPOSITOR)
By: /s/ C. JAMES PRIEUR
----------------------------
C. James Prieur
President
</TABLE>
Attest: /s/ ELLEN B. KING
- ------------------------
Ellen B. King
Secretary
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Depositor, Sun Life Assurance Company of Canada (U.S.), and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES AND TITLE DATE
- -------------------------------------------- -----------------
<S> <C>
/s/ C. JAMES PRIEUR
- -------------------------------------------
C. James Prieur January 11, 1999
President and Director
(Principal Executive Officer)
/s/ ROBERT P. VROLYK
- -------------------------------------------
Robert P. Vrolyk January 11, 1999
Vice President and Actuary
(Principal Financial and Accounting Officer)
/s/ DONALD A. STEWART
- -------------------------------------------
Donald A. Stewart January 11, 1999
Chairman and Director
* /s/ RICHARD B. BAILEY
- -------------------------------------------
Richard B. Bailey January 11, 1999
Director
</TABLE>
* By David N. Brown pursuant to Power of Attorney filed with Post-Effective
Amendment No. 10 to the Registration Statement on Form N-4 of the Registrant
(File No. 33-41628).
II-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES AND TITLE DATE
- ---------------------------------------- -----------------
<S> <C>
* /s/ M. COLYER CRUM
- ----------------------------------------
M. Colyer Crum January 11, 1999
Director
* /s/ DAVID D. HORN
- ----------------------------------------
David D. Horn January 11, 1999
Director
* /s/ JOHN S. LANE
- ----------------------------------------
John S. Lane January 11, 1999
Director
* /s/ ANGUS A. MACNAUGHTON
- ----------------------------------------
Angus A. MacNaughton January 11, 1999
Director
* /s/ JOHN D. MCNEIL
- ----------------------------------------
John D. McNeil January 11, 1999
Director
*/s/ S. CAESAR RABOY
- ----------------------------------------
S. Caesar Raboy January 11, 1999
Director
</TABLE>
* By David N. Brown pursuant to Power of Attorney filed with Post-Effective
Amendment No. 10 to the Registration Statement on Form N-4 of the Registrant
(File No. 33-41628).
II-2
